Web Shopping

Today's Assignment

Use caution and be educated when shopping for life insurance on the web

Many companies now sell life insurance on the Web, as well as give free quotes and advice.

The key to buying on the Web is to shop by price and by the company's rating. Several agencies, including Standard & Poor's and A.M. Best, rate insurers on their claims-paying ability. Stick with companies with low prices, the term you want, and a top rating.

Here are some sites that sell the policies of multiple companies:
- Insure.com has quotes from over 90 companies and plenty of detail on the policies available.
The site also supplies ratings for the insurers from the major rating agencies, such as A.M. Best.

- Insweb has some pretty good worksheets and advice, lets you save quotes for later retrieval, and lists an 800 number.

- Accuquote has over 1,600 policies in its database. But you need to fill out a lengthy form to get a quote. The site is an independent service.

Your Health can affect your premium

Today's Assignment

Start today to improve your health and decrease your insurance premiums

The cheapest rates, known in the business as select or preferred, go to those who are in good health and who have a family history of good health.

If you take heart medication or are grossly overweight, you may pay 50 percent more than preferred rates.

If you smoke, have a risky occupation, or engage in risky sports like skydiving, you'll pay even more for life insurance.

If you fall into one of these more expensive categories, it pays to shop around. One company may charge much more than another, depending on how it estimates the risk of your condition (that's called underwriting). This is where a knowledgeable agent may come in very handy.

Internet and phone quote services aren't set up to deal with nonstandard policies.
Why, some people might ask, should I tell the insurance company about negative information that will raise my rates? Well, even if you somehow get around the medical tests and other checks done before the policy is issued, it doesn't pay to try to fool the insurer.

Insurers may investigate suspicious claims. If the company finds out you've lied, the claim may be denied, or your heirs could be tied up in court for years.

So there's a good case to be made for getting a policy early in life while you are still in good health. However, it doesn't make much sense to buy one until you have dependents.

How Long do I need life insurance?

Today's Assignment

Determine how long you will need to be covered. Consider the following:

Agents like to talk about policies you can keep throughout your life. What they sometimes won't tell you is that you don't need life insurance coverage throughout your life.

The secret to buying a policy with the right term is figuring out how long you need to be insured. You start by estimating when your children will be out on their own and no longer in need of your financial support.

So if your children are 3 and 5 now, you'd probably want a policy that covers you at least until the youngest is 22, so that's about a 20-year term. But this depends somewhat on your age as well.

Say you also want to cover your spouse for your lost income until what would be your normal retirement age, 65, and you're only 35 now. Then you would want a 30-year policy.

Keep in mind that insurance gets very expensive as you leave your 50s. So you may pay more to cover yourself until 65, even if you lock in a level-premium, 30-year policy when you are 35. Coverage past age 70 or so may be unattainable.

Life insurance is not a substitute for a retirement plan. You want to plan so that you'll have enough to live on when you retire, and you won't have to keep paying insurance premiums.
There are exceptions, however. People who start families late in life, or who have complex estate-planning issues, may well have a need for life insurance beyond the customary retirement age.

One more thing: Steer clear of so-called mortgage insurance policies, which pay off the balance on your mortgage if you die. The problem is that you are paying for a steadily declining amount of coverage, as you pay down your mortgage. It's best to include the mortgage payments in your calculations when determining how much coverage you need.

How Much Life Insurance do I need?

Today's Assignment

Consider the following when determining the amount of coverage you need:

There is no simple answer to how much coverage is enough.

Some financial planners say you need enough insurance to replace five to seven years of your salary. If you have young children or significant debt, you should bump up your coverage so you have enough to replace as much as 10 years of your salary, they say. That would mean a person making $50,000 a year should have anywhere from $250,000 to $500,000 worth of coverage or more.

Remember, the sole purpose of life insurance is to replace your income in case you die, so that your dependents can maintain their current lifestyle.

Factors to consider include whether the surviving partner will have child care expenses if one partner is out of the picture. Do you have other assets on which to draw? Will your children be out of the nest soon? These, and many other factors, influence the decision on how much coverage you need.

Buying a whole-life policy doesn't necessarily mean you are fully insured. Because of the investment component of whole life, the policies are much more expensive than term. Don't simply buy less coverage, as it defeats the purpose of buying insurance in the first place: to cover dependents.

Next, you've got to figure out how long you need the policy

What you need to know about term life insurance

Today's Assignment

Keep in mind the following when purchasing term life insurance

Buy enough term coverage to fill your needs.
Life insurance is no place to skimp, especially with rates at historic lows.

Match the term of the policy to your needs.
You want the policy to last as long as it takes for your dependents to leave the nest - or for your retirement income to kick in.

Buy when you're healthy.
Older people and those not in the best of health pay steeply higher rates for life insurance - so buy as early as you can, but don't buy until you have dependents.

Tell the truth.
There's no sense in shading the facts on your application to get a lower rate. Be assured that if a large claim is made, the insurance company will investigate before paying.

Use the Web to shop.
Buying life insurance has never been easier, thanks to the Internet. You can get tons of quotes - and avoid the pushy salespeople.

Life Insurance - your best interest

Today's Assignment

Is whole life really in your best interest?

Insurance is sold, not bought.
Agents sell the vast majority of life policies written in the U.S. because the life insurance industry has a vested interest in pushing high-commission (and high-profit) whole-life policies.

Whole life is expensive.
Policies with an investment component cost many times more than term policies. As a result, many people who buy whole life often can't afford an adequate face value, leaving themselves underinsured.

Whole-life policies are built on assumptions.
The returns quoted by the agent are simply guesses - not reality. And some companies keep these guesses of future returns on the high side to attract more buyers.

Keep your investing and insurance strictly separate.
There are better places to invest - and without the high commissions of whole-life policies.

What you need to know about life insurance pt1

Today's Assignment

Determine the type of life insurance you wish to have

There are term policies, or pure insurance coverage. And there are the many variants of whole life, which combine an investment product with pure term insurance and build cash value.

Short term health insurance

Today's Assignment

If you cannot afford the more traditional, comprehensive health insurance, consider a short term alternative

Short-term health insurance is meant to protect you against accidents, injuries and illness. These are policies do not cover existing or pre-existing health conditions. Short-term health insurance does not provide for routine care such as an annual physical but instead is meant to help you cope with a health crisis.

Short-term health insurance is typically less expensive than a traditional, comprehensive plan. Of course, the short-term plan is less expensive as it covers only those situations which arise out of unexpected accident, injury or illness. You will find that most plans provide for hospitalization but may or may not cover needed home care services or medications. You need to review any plan to know exactly what you are buying.

Short-term health coverage is most often available for a period of 6 – 12 months. It is not designed to be a long-term solution to your health insurance needs. Some policies are extendable after one period but your premium may be increased.

In some situations, the purchase of a short-term policy may limit your ability to obtain comprehensive insurance at a later time. Don’t let any insurance agent or salesperson pressure you into taking out a short-term policy until you know how these policies may impact your access to other coverage programs in the future.

When shopping for any insurance, it’s best to check out the plan as well as the company selling the plan with your state insurance commissioner’s office. Believe it or not, there are companies selling “fake” policies to unknowing consumers. You may find only when it’s too late that your policy is not valid in your state or that the company has folded due to federal investigation or lawsuit.

What is a Health Savings Account?

Today's Assignment

Determine if your family would benefit from a health savings account

Health insurance pricing is complex, and it varies between carriers, but in general, your premium is higher when you have a low deductible. Individuals or families who are heavy users of medical services may do better by keeping a low deductible, to avoid constant outlay. But if you are reasonably healthy, it is often advantageous to take an insurance policy with a higher deductible. The HSA works hand-in-hand with a high-deductible policy, allowing you to put money, up to your deductible amount, in a special tax-deferred account. You can use funds from that account for all of your deductible expenses, and certain other healthcare expenses that are not covered by your policy at all. For example, you can use your HSA to pay for prescription or over-the-counter medications, even if your health insurance plan does not have a prescription benefit. It can also be used to pay for dental or vision care. Money in your HSA cannot be used to pay your insurance premiums, but it can be used to pay for COBRA coverage if you become unemployed. If there are funds left in your account at the end of the year, you can roll it over to the next year. Older "flexible spending accounts" work like an HSA, but if you do not use the money by the end of the year, you lose it. HSA funds stay with you, and any money in your account that you do not use, continues to earn interest.

To qualify to purchase an HSA, you must have a qualified, high-deductible health insurance policy that meets the IRS guidelines. Your insurance carrier will tell you whether or not any given policy complies. The policy must have at least a $1,000 deductible for individuals, or $2,000 for families. You can contribute up to $2,650 a year to your HSA if you are single, or $5,250 if you are a family, but only up to the amount of the actual deductible. There are no income limits, and you can still have an IRA at the same time as an HSA. In case of a financial emergency, you may withdraw the money out of your HSA for non-medical use, but there will be a 10 percent penalty if you take it out before you are 65.

Spending money from your HSA is easy. Your provider will usually give you a debit card or checkbook tied to the account, which you use to pay for your healthcare services. Alternately, you can pay for services out of pocket, and then pay yourself back out of the HSA. Of course, don't forget to save your receipts showing that the expenses were legitimate.

You can set up your HSA through your insurance carrier if they offer it, but even if they don't, you can still have an HSA through a third party such as a bank or other financial institution. The benefits are substantial. Your monthly premiums may be half what you would otherwise pay for a lower-deductible policy, and you also gain a major tax break. There's no question, healthcare is expensive no matter how you cut it--but the HSA plan helps to make it a little more manageable.

What Health coverage do I need?

Today's Assignment

Determine the best type of health insurance for your family

Fee-for-services health insurance. As its name indicates, fee-for-services health insurance is a basic indemnity policy. In short, with fee-for-services health insurance you make a claim when you need to, and your health insurance provider then deducts this sum from your pre-agreed health insurance sum. The upside of fee-for-services health insurance is that you can visit any healthcare provider you want and then you make a claim – although you should read the health insurance policy carefully as some types of treatment are not covered.
The major downside of fee-for-services health insurance is the cost, which traditionally is very high. Unlike other types of health insurance which have come on the market since the conception of fee-for-services health insurance, premiums can be high and the only way to reduce this high premium charges is to increase your deductibles. However, careful consideration does need to be given to increasing your deductibles as this can lead to you being left with a hefty bill if you need hospital treatment.

Health Maintenance Organization health insurance (HMOs). HMOs are a more recent addition to family health care insurance and are popular because they’re the cheapest – in premiums - type of health care insurance you can purchase for your family. Obviously, whenever you buy cheap insurance you usually find that you have certain restrictions as to exactly what you can do – and HMOs are no different in this respect, so you have to be careful. In particular, HMOs usually designate certain healthcare providers who you are allowed to visit and if, even in the case of an emergency, you visit a healthcare provider who is not approved by the HMO, you’ll be left to pick-up the entire tab yourself.


Other types of health care insurance. In response to the high costs associated with fee-for-services health care insurance and the restrictions of HMOs have come other types of health care insurance. Notable in this are schemes such as Preferred Provider Organizations (PPOs), which, again, involves a network of particular doctors you are required to visit. However, where PPOs differ from HMOs is that you may be able to claim for some reimbursement if you visit a healthcare provider outside of the network of PPO healthcare providers – depending on the health care policy your family have.

So if you are looking for family health care, please make sure you give special thought to this and make sure that you are not one of the 40 million Americans today walking around with no health care insurance in the eternal hope that nothing unexpected happens

Shopping for Health Insurance = pt 5

Today's Assignment

Check for licenses

Call your Better Business Bureau to learn if complaints have been filed against the broker or company. Check with your state insurance commissioner’s office to be certain that the broker and company is licensed to operate in your state. Be sure you’re buying a legitimate policy and not a scam.

Taking charge of your health means taking charge of your health insurance. Shop with your eyes open and your hands on your wallet.

Shopping for Health Insurance -pt 4

Today's Assignment

Bypass the broker and buy directly from the insurance company

You may be able to save between 3 – 10% by doing so. Contact your state commissioner’s office for insurance to learn which companies will sell directly to you.

Shopping for Health Insurance-pt 3

Today's Assignment

Check out who the broker represents

Does your broker represent only one company or does the broker sell the plans of multiple companies?

Shopping for Health Insurance pt 2

Today's Assingment

Know the pros and cons of each plan

A major medical plan will typically have higher rates than a short-term plan however if you develop any health problems during the time of a short-term plan then you’ll have the problem of pre-existing conditions either forcing you into higher rates or placing you in the position of not being able to buy coverage

Shopping for Health Insurance

Today's Assignment

Get multiple quotes

Either visit the offices of insurance companies locally or use the web to compare rates, benefits and policy terms. Don’t take out any insurance plan until you review at least three plans. Consider comparison shopping with at least two to three brokers

Ways to Keep Homeowner's Premiums Down

Today's Assignment

Find ways to reduce the premium on your Homeowner's policy

Don’t confuse what you paid for your house with rebuilding costs
The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So don't include its value in deciding how much homeowners insurance to buy. If you do, you will pay a higher premium than you should.

Buy your home and auto policies from the same insurer
Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverages from different companies.

Make your home more disaster resistant
Find out from your insurance agent or company representative what steps you can take to make your home more resistant to windstorms and other natural disasters. You may be able to save on your premiums by adding storm shutters, reinforcing your roof or buying stronger roofing materials. Older homes can be retrofitted to make them better able to withstand earthquakes. In addition, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.

Improve your home security
You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. These systems aren't cheap and not every system qualifies for a discount. Before you buy such a system, find out what kind your insurer recommends, how much the device would cost and how much you'd save on premiums.

Seek out other discounts
Companies offer several types of discounts, but they don't all offer the same discount or the same amount of discount in all states. For example, since retired people stay at home more than working people they are less likely to be burglarized and may spot fires sooner, too. Retired people also have more time for maintaining their homes. If you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies. Some employers and professional associations administer group insurance programs that may offer a better deal than you can get elsewhere

Shop Around

Today's Assignment

Looking for a new homeowner's policy? Or better deal on an existing policy?

It will take some time, but could save you a good sum of money. Ask your friends, check the Yellow Pages or contact your state insurance department. National Association of Insurance Commissioners (www.naic.org) has information to help you choose an insurer in your state, including complaints. States often make information available on typical rates charged by major insurers and many states provide the frequency of consumer complaints by company.

Also check consumer guides, insurance agents, companies and online insurance quote services. This will give you an idea of price ranges and tell you which companies have the lowest prices. But don't consider price alone. The insurer you select should offer a fair price and deliver the quality service you would expect if you needed assistance in filing a claim. So in assessing service quality, use the complaint information cited above and talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs.

Check the financial stability of the companies you are considering with rating companies such as A.M. Best (www.ambest.com) and Standard & Poor’s (www.standardandpoors.com) and consult consumer magazines. When you've narrowed the field to three insurers, get price quotes.

All About Homeowners Insurance

Today's Assignment

Learn the 4 types of coverage for homeowners

Property Damage Coverage
Property damage coverage helps pay for damage to your home and personal property. Other structures such as a detached garage, a tool shed, or any other building on your property are usually covered for 10% of the amount of coverage on your house.

Personal property coverage will pay for personal property including household furniture, clothing, and other personal belongings. The amount of insurance coverage is usually 50% of the policy limit on your dwelling. The coverage is also limited by the types of loss listed in the policy. The coverage only pays the current cash value of the item destroyed, unless you purchase replacement cost coverage. Your homeowner's policy also provides off-premises coverage. This means that the policy covers your belongings against theft even when they are not inside your home.

Personal Liability Coverage
Homeowner's policies provide personal liability coverage that applies to non-auto accidents on and off your property if the injury or damage is cased by you, a member of your family, or your pet. The liability coverage in your policy pays both for the cost of defending you and paying for any damages the court rules you must pay. Liability insurance does not have a deductable that you must meet before your insurer begins to pay losses. The basic liability coverage is usually $100,000 for each occurance. You can request higher limits that are available for an additional cost.

Medical Payments Coverage
Medical payment coverage pays if someone outside your family is injured at your home regardless of fault. This includes payment for reasonable medical expenses incurred within one year from the date of loss for a person who is injured in an accident in your home. The coverage does not apply to ypu and members of your household. The medical payments portion of your homeowner's policy will also pay if you are involved in the injury of another person away from your home in some limited circumstances. Medical payments coverage limits are generally $1,000 for each person.

Additional Living Expenses
If it is necessary for you to move into a motel or apartment temporarily because of damage caused by a peril covered in your policy, your insurance company will pay an amount up to 20% of the policy limit on your dwelling for these expenses. If you move in temporarily with a friend or relative and do not have any extra expenses, you will not be paid any addditional living expenses by your insurance company.

How Much do I Need?

Today's Assignment

Figure out how much Auto Insurance you need

­While it is dangerous to be underinsured, having too much insurance can be an expensive mistake as well. Without insurance, your property is put at risk in an accident that is your fault. The minimum amount of insurance required in your state is seldom enough.

State law may require as little liability coverage as $15,000 per person, $30,000 per accident, and $5000 property damage. About half of the states require $25,000 per person and $50,000 per accident. Half of them require $10,000 in property damage coverage. If you can afford it, buy more than the minimum. After all, $10,000 for property damage may not be enough if you hit a $100,000 Mercedes-Benz.

The more assets and income you have, the more insurance you need. Most insurers recommend liability coverage of at least $100,000 per person, $300,000 per accident, and $50,000 property damage if you have assets to protect, such as a house. Some insurers also recommend a $1 million "personal liability umbrella" policy issued in conjunction with homeowner's coverage. State Farm reports that such coverage averages $270 a year, but the amount varies significantly depending on location and other factors. An "umbrella" policy could protect a family from financial ruin in a major lawsuit.

Like buying a car, there is no single best solution when it comes to buying insurance. Rates vary widely. Surveys suggest that you could pay anywhere from $500 to $2000 annually for the same coverage from different companies. Shop for insurance by consulting two or three of the largest insurers, such as State Farm and Allstate. Then, contact one or two independent agents who can quote premiums from more than one company. In addition, there are direct-marketing companies, such as GEICO and Progressive, which do business over the phone rather than through agents and offer some of the lowest rates. Ask for an itemized list of coverages and costs.

"We're price-competitive," said spokesperson Dick Luedke of State Farm, whose rates dropped somewhat during 2004. But with so many factors involved in setting rates, it's wise to check several prospects.

In 2004, the average price of auto insurance nationwide was $871, according to the Insurance Information Institute. They expected that the cost of auto insurance would rise by 3.5 percent in 2004, which would be the smallest increase in four years.

Don't forget the Internet. Many companies now offer online quotes, and insurance shopping on the Web allows you to compare rates from multiple providers in the comfort of your own home.

Who ARe You?

Today's Assignment

Find out how the factors you can control the least have the greatest impact on your insurance costs.

Your age, gender, and driving record are key factors that affect your insurance premium.

Single males under the age of 25 pay the highest rates. Statistics show they are involved in the most accidents, so insurance companies charge young men higher premiums than women of the same age. Married men, who statistically have fewer accidents, pay less than single men. A handful of states do not allow rates based on sex or age, but that prohibition has tended to result in higher rates for women, not lower rates for men.

If you are convicted of moving traffic violations or of causing an accident, your premiums will likely go up, no matter what your age. Drivers with clean records -- no tickets, no accidents -- pay the lowest rates.

Where you live also plays a big role in how much you pay. Urban areas, with their greater population densities and heavier traffic, get higher rates than rural areas. According to the Insurance Information Institute, the average insurance expenditure in mainly urban New Jersey -- traditionally the most expensive state -- in 2002 was more than double that of North Dakota, a rural state with the lowest average premiums. High costs in states such as Florida, Massachusetts and New York are attributed to growth in fraud and theft.

In most states, too, insurers set rates by zip codes. If you live in a major city like Chicago or Los Angeles, you will probably pay more than if you lived in a nearby suburb.

What are you Driving??

Today's Assignment

Learn how the kind of car you drive influences your auto insurance premium.

Insurance premiums are based partly on the price of the vehicle, which affects the replacement cost if it is stolen or "totaled" in an accident. How expensive the vehicle is to repair -- including parts and labor -- can also affect the cost. In addition, surcharges may apply to vehicles that are frequently stolen or involved in accidents.

Industry-wide information on injury claims, collision repair costs, and theft rates by vehicle model is available from the Highway Loss Data Institute (HLDI). You can write them at 1005 North Glebe Road, Arlington, VA 22201. HLDI is affiliated with the Insurance Institute for Highway Safety (IIHS).

According to HLDI, the lowest injury claims are from large vehicles -- cars, pickup trucks, and sport-utility vehicles. Small 2- and 4-door cars have the highest injury claims. Small cars also are among the highest in collision costs, along with sports cars.

If you have your heart set on a sporty vehicle, you'll probably pay dearly. Insuring a high-performance car can easily cost two or three times the insurance amount for an ordinary model.
Sport-utility vehicles, the hottest market segment, often have higher insurance rates than mid- and full-size cars, but some SUV models are relatively cheap to insure. SUVs are "hot" for other reasons: They are among the most frequently stolen vehicles, and they are more expensive than most cars. Cadillac's Escalade is currently the most popular model sought by thieves, but it's followed by the Nissan Maxima sedan. SUVs also can cost more to fix after an accident if the 4-wheel-drive system is damaged.

However, insurance companies set rates based on their own experience. If Company A has more collision and theft claims for a particular vehicle than Company B, then A will charge more for the same coverage. It all boils down to a company's actual experience with a particular vehicle or category of drivers. That is why it pays to shop around for insurance.

What does that mean???

Today's Assignment

Know Your Auto Insurance Coverage Types­

­What is your car insurance actually insuring?

Although you're buying a single insurance policy covering a specific vehicle, a number of components make up the final cost:

Bodily injury liability: Covers injury and death claims against you, and legal costs, if your car injures or kills someone.
Property damage liability: Covers claims for property that your car damages in an accident. Because liability coverage protects the other party, it is required in all but three states.
Medical payments: Pays for injuries to yourself and to occupants of your car. This is optional in some states. In "no-fault" states, personal injury protection replaces medical payments as part of the basic coverage.
Uninsured motorist protection: Covers injuries caused to you or the occupants of your car by uninsured or hit-and-run drivers. "Under-insured" coverage also is available, to cover claims you may make against a driver who has inadequate insurance. In some states, as many as 30 percent of drivers are uninsured.
Collision coverage: Covers damage to your car up to its book value. Collision coverage carries a deductible, which is the amount per claim you have to pay before the insurance takes effect. The lower the deductible, the higher the premium. While it is legally optional, a lending institution or leasing company usually requires collision coverage.
Comprehensive (physical damage): Covers damage to your car from theft, vandalism, fire, wind, flood, and other non-accident causes. Comprehensive also carries a deductible

Save Money on Auto Insurance

Today's Assignment

Ask your insurance agent about any safety features that can lower insurance costs. For example, antilock brakes or an alarm on a car will lower your auto insurance premium (A premium is the cost of the insurance, usually payable monthly, quarterly or yearly).

Reduce your Insurance cost

Today's Assignment

Find out if your insurer offers a discount by having multiple policies with them ( e.g. having both auto and home owners or both you and your spouse's vehicles with the same company)

Theme for September: Family Insurance Needs

An essential part of financial success is ensuring that your family’s insurance needs
are met. Families may experience many unexpected events in life. Insurance is one
way to prevent devastating financial consequences for the family when these
unexpected life events happen.

What types of Insurance will my family need?

There are four main types of insurance that families need:
• Automobile Insurance
• Home Owners Insurance
• Health Care Insurance
• Life Insurance

Stay tuned during September for details regarding each of these types of insurance....