General Insurance Articles

Cheat Sheet / Updated 02-18-2022

Health insurance, car insurance, and life insurance are a part of everyday life. Making a list of all your insurance policies helps you keep track of them, and also serves an important purpose for your loved ones if the day comes when your life insurance policy is activated. You may also want to review your umbrella policy and fix any gaps in your coverage. And if you’re in a car accident, remembering all the information your insurance company wants you to get is easier if you carry a list in your glove compartment.

Article / Updated 04-25-2016

When you’re in a car accident, it’s easy to forget what information you need — you’re shaken up and rattled. But for your insurance company and that of any other people involved, carry a copy of the following list in your glove compartment so that you get all the information you need to protect yourself and expedite your insurance claim. Date and time of accident Accident location (take photos if you have a cellphone with a camera) Name, address, phone number, and driver’s license number of the driver of the other vehicle Injuries (for each person) Name, address, and phone number of each witness Police department responding, including phone number Police case number Police officer’s name Tickets issued (if any) Name, address, and phone number of each passenger in your vehicle Name, address, and phone number of each passenger in the other vehicle Name, address, phone number, and driver’s license number of the owner of the other vehicle (if different from driver) The year, make, model, license plate number, and vehicle identification number (VIN) of the other vehicle The insurance company, insurance agent (name and phone number), and policy number of the other vehicle’s driver The insurance company, insurance agent (name and phone number), and policy number of the other vehicle’s owner (if different from driver)

Article / Updated 03-26-2016

You buy insurance to protect your income, your family, and your assets from financial ruin. But just any old insurance won’t do. You owe it to yourself and your loved ones to obtain and maintain the correct type and amount of coverage from a financially secure insurance company. Insurance is worth nothing if the company isn’t around to pay claims when you’re in need. And you definitely don’t want to waste money paying for insurance that won’t pay off if the need arises because the insurer argues that your loss isn’t covered. Become an informed consumer by doing your own research. Check out the quality companies and the types of insurance you feel you need before you contact an agent. Here is a checklist of the major issues to consider when evaluating your current insurance coverage or considering purchasing new policies. What is the financial strength of the insurance company? Check out A.M. Best ratings on any home, auto, life, or health insurance company, and only do business with the financially strongest companies. The financially strongest companies can also be competitively priced. You don’t have to give up security to save money. You can also see how Standard and Poor's rates these same companies. What are the claims payment history and customer service ratings? Visit your state insurance regulator’s Web site or call the regulator’s office and inquire about the insurance company’s complaint history. Check out the rankings on overall customer satisfaction, claims payment history, pricing, and communications with J.D. Power and Associates. Another great resource to check out a company’s customer service history is Consumer Reports. Click Money and then Insurance. Consumer Reports online is available for a modest annual subscription price. Compare Prices: You can find many online resources that enable you to obtain quotes and additional information so that you can do some comparison shopping. EHealthInsurance.com Insure.com Insurance.com SelectQuote.com After you’ve had the opportunity to check out the financial strength of an insurance company, whether its customers are happy, and whether its price is competitive, you’ve greatly narrowed your selection. The only things remaining are the specific “bells and whistles” of the insurance coverage you currently own or are considering. When you comparison shop, get quotes on comparable policies from three different sources. The three primary ways to obtain insurance quotes and products are through the following: A captive agent represents only one company. Captive agents can be extremely competitive and provide exceptional customer service, especially for home and auto coverage. However, you won’t likely want to acquire all your insurance through one captive agent. These types of companies often aren’t the most competitive in the areas of life, health, disability, and long-term care insurance. An independent agent represents multiple insurers. Independent agents can do a lot of comparison shopping for you and may be able to provide you with one-stop shopping for all of your insurance needs; however, don’t count on it. Shop around — even among independent agents there can be a huge difference in their offerings. Buying directly from the insurance company is another option. Don’t count on any personalized attention, but you may save some money. However, buying certain types of insurance, such as long-term care, disability, or medical insurance, without the guidance of an insurance professional may not be in your best interest. Many insurance agents and companies out there are very interested in parting you from your money. In almost every case, insurance agents are paid only when they sell you a policy, and the more they sell you, the more money they make. Too often, insurance agents don’t put your best interest first. Above all, remember that insurance agents are sales people. Buyer beware!

Article / Updated 03-26-2016

People are exposed to many different types of risks in their financial lives. Practical and effective ways to deal with these risks typically means insurance. Finance and investing textbooks define two primary types of risk: Systematic risk is the type of risk that is impossible to avoid completely. Examples of systematic risk include inflation, recessions, and war. You can do either very little or nothing to protect yourself from systematic risks, and no amount of portfolio diversification can eliminate systematic risk. Unsystematic risk is a risk that affects an isolated group of companies, industries, or countries. A company’s stock plummeting after the news that the FDA declined approval of its highly anticipated new drug is an example of unsystematic risk. Diversification substantially reduces or eliminates unsystematic risks. Systematic and unsystematic risks are the textbook definitions of financial risks, but risk is better defined as uncertainty. For example: Will you continue to be employed? Will your company require you to relocate? What happens if your teenager wrecks the car? What if the interest rate on your adjustable rate mortgage skyrockets? What if your in-laws have to move in? What happens if you live to be a centenarian? What happens if your child or significant other is diagnosed with a long-term illness requiring you to quit your job and stay home to care for them? What happens if you wake up at age 60 and discover that you no longer want to work for a living, but you haven’t saved enough to retire? What happens if your spouse dies prematurely? What if your home is destroyed by a flood? What if you’re sued because your dog bites the neighbor’s kid? The list could go on and on. Insurance is designed to help you when can’t afford to bear a risk personally. Successful financial planning involves anticipating future events and all probable outcomes — both good and bad. Risk management attempts to eliminate, minimize, or transfer the risk of all your anticipated bad outcomes. You can handle several risks without much hardship if you have sufficient cash reserves on hand. For example, your teenager wrecks the car — hopefully, no one is hurt, and you have auto insurance — but you also need some cash to cover the deductible due before your insurance kicks in. You may even need additional cash to pay for a rental car until yours can be repaired. In this example, you have shouldered a certain amount of risk yourself: the deductible and the cost of the rental car. You have also transferred the majority of the financial risk to the auto insurance company. Establishing a safety net of three to six months worth of cash reserves, adequately insuring your home and property, your health, and your income, and remaining very aware of potential dangers goes a long way toward ensuring that you and your family won’t be financially devastated when bad things happen — and they do happen. It’s not a matter of if, but a matter of what and when.

Article / Updated 03-26-2016

Insurance protects you against the risk of the unknown. You probably wouldn’t even consider not having homeowner's or auto insurance, but you might not know what kind of insurance you need. Insurance is there to help you if you can't afford to pay out of your pocket to set right something that has gone wrong, like a car accident, a tree in your yard falling on a neighbor's house, the medical costs of a serious illness, or the death of a spouse. Assess your life and your needs and think about what you need to protect. You may need to consider the following types of insurance. Disability insurance Did you know that you're more likely to become disabled for a period than to die? Your most significant asset is your ability to earn money, so you need to ask yourself some questions: If I become disabled, how would I cover my living expenses? How will I be able to save for retirement? And because an overwhelming majority of disabilities are health related, can I afford the risk of being without a paycheck and possibly having increased healthcare expenses? Protecting your income by purchasing disability insurance is a fundamental risk management strategy for all wage earners whose income is required to maintain their lifestyles. The two primary types of disability insurance include Short- term: Coverage will provide income replacement protection, usually after one week of disability, and will pay for up to six months. Long-term: This type of disability insurance kicks in generally at the six-month mark and continues until age 65. If you have disability insurance through your employer, you probably have only long-term disability coverage, and typically the coverage ranges between 60% and 70% of your current gross salary. So, if you’re struggling to get ahead on 100% of your salary, how do you think your finances will work on 60% to 70% of what you’re currently making? Life insurance Under most circumstances, you need life insurance to protect your surviving family, who depend on your income. The overwhelming majority of Americans are drastically underinsured in the event of premature death. Buying life insurance for a stay-at-home parent is useful, too. Although it doesn’t protect the family from their loss of income, it can help offset the additional costs that it would take to replace that stay-at-home parent’s services. For example, replacing the services of a stay-at-home mom caring for a 3-year-old and a newborn would cost $30,000 per year or more to hire a full-time nanny until the kids are in school. In addition, the children would need after-school care for several more years, and you might need a number of other domestic services, too. All these expenses add up to $250,000 or more of life insurance needed on the stay-at-home parent. Fortunately, term life insurance is quite affordable, presuming that you’re fairly healthy. The cost of a high-quality, 20-year level term life insurance policy on a young mother may cost $300 to $400 per year — a level premium for 20 years! Health insurance Nearly one in five Americans under age 65 has no health insurance. Over half these people state cost as the reason. Almost 25% of uninsured people lost their health insurance when they lost or changed jobs. The unfortunate thing about insurance is that if you can’t afford the premium, you definitely won’t be able to afford bearing the risk yourself. Long-term care insurance Medicare or your health insurance policy will not pay for long-term care expenses. These expenses are covered in one of three ways: self pay, long-term care insurance, or Medicaid — and you have to be nearly broke to qualify for Medicaid. Consider purchasing long-term care insurance the day before you’re going to need it. Unfortunately, you can’t know what day that will be, so purchasing long-term care insurance between ages 50 and 65 is a good idea. The price of the insurance goes up as you get older, and the likelihood of needing long-term care insurance increases. Coverage isn’t available for anyone over 80 years of age. Weigh your risks wisely: Don’t be pennywise and pound foolish. Auto insurance If you own a vehicle and ever let it out of the garage, you must have auto insurance. Depending on the value of your vehicle and your state’s requirements, the type of automobile insurance you should carry will vary. Homeowner's insurance If you own a home and you have a mortgage, you must maintain adequate homeowner's insurance protection. Your mortgage company requires it. Even if you own your home outright, you still need to have homeowner's insurance to replace or repair the things that are too expensive or impossible to pay for yourself. Liability insurance You have some liability insurance protection provided with both your auto and homeowner's insurance coverage, but you may also determine that additional liability insurance is warranted. Liability insurance pays for legal fees and damages if you hurt someone or cause injury due to your negligence.

Article / Updated 03-26-2016

It may not be a particularly welcome thought, but you generally purchase insurance for when things go wrong, and death is the last thing that will go wrong for you in this life. But the list you make now — and update annually — of your insurance policies can save your loved ones a lot of headaches at a difficult time. Make copies of a list of all your insurance policies, investments, and bank accounts that includes the following information: Policies and type: Umbrella, auto, home, health, dental, disability, and life insurance; and IRA, 401(k), and bank accounts The insured item or person The issuing company or institution and the policy or account number Amount of coverage Annual premium Agent and contact information On the same list include, phone numbers for the professionals knowledgable about your Will and legal dealings (write down the location of your will) Accountant Investment manager or advisors Banks and bankers Insurance agent

Article / Updated 03-26-2016

You purchase umbrella insurance so that you’re covered under every contingency. An umbrella policy should also provide coverage for the gap between the value of the insured item and the amount you owe on it. The following table lists basic umbrella coverage every umbrella policy should include: Gap Description What Coverage You Need Comments Territory of coverage Worldwide Make sure lawsuits outside the U.S. and Canada are covered. Personal injury liability Libel, slander, false arrest, and so on Underlying insurance may be required. Be careful. Coverage of newly acquired vehicles, boats, and so on Automatic, no notice required Poor policies require notification in 30 days or no coverage. Dangerous! Liability assumed in contracts Weddings, parties, rentals of all kinds Poor policies limit coverage to residential contracts only. Punitive damages Allowed in some states You could travel in a state that allows them.