Friday, November 23, 2018

Insuring a Teenage Driver

It’s a big deal when your teenager gets their first-time driving license. A mid all the celebration (and worry for the elders) about the newfound freedom, there are the financial implications to consider.

Besides the cost of buying another car, (if you want to give the teen their own vehicle), there are the additional gas bills and more importantly insurance costs to bear. Insurance is one area where it is easy to make wrong decisions. Here is a guide to getting the right auto insurance for your teenager at the right cost.

Add the teen to your existing policy

Generally speaking, it costs less to add your teen to your own auto insurance policy than to purchase a separate one for them. The better your own driving record is, and the safer and more reliable the car you drive is, the lower will be the premiums.

Additionally, the type of car the teen drives impacts the cost. If it is going to be like your own safer model or another similar one, the cost of coverage will be lower than if you buy for your teen a high-powered sports car.

Assess your deductible

The higher the deductible, the lower is the premium. Increasing your deductibles can lower the premiums; however, should an accident occur, your out of pocket will be more. With a teenage driver at the wheel, the chances of fender benders and dings and dents are high, and so be careful about using this option.

Check for discounts

Ask your insurance company about the discounts that may be available. For example, the company may reduce the premiums if the teen has an image of a good student with a high GPA. If the teen is leaving for college and will not be taking the car along, a discount may be available as there will be less driving done. Explore all possible avenues of discounts.

Choose the right vehicle

If you are buying a car for your teen, consider getting a safe, reliable used vehicle. The cost of coverage will be lower than that for a shiny brand new car.

Avoid small claims

Scratches and minor dents are going to happen willy-nilly. If you file an insurance claim each time this happens, your rates will go up. Keep your deductible in mind too; since you will pay some part of the repair cost yourself, is filing a claim really worth it?

Think about a driving school

Teaching your teenager to drive is indeed a rite of passage. However, sending the teen to a driving school, preferably one approved by your insurance company, may entitle you to a discount.

Seek professional guidance

Auto insurance involves a large number of variables, some of which are easy to misunderstand or overlook. These mistakes can leave you with an avoidable high payment schedule. Even worse, they could leave you and your teenager underinsured; that could have serious financial implications, should an accident occur.

Obtaining the guidance of a reputed professional insurance agent will give you the right inputs to make the right decisions. That will ensure proper auto insurance for the new driver in the family.

Residents of Santa Clara and San Mateo, Beware of Health Insurance Issues!

It is not healthy to worry needlessly about your health. However, ignoring the signs of potential health issues is even worse. Hypochondria is not a good thing – but health is, in many ways; it is just a matter of common sense and taking essential precautions. The same wisdom applies to the matter of health insurance.

The right health insurance coverage for your family is critically important. It requires your time and attention as well as expert advice. If you have already gone through the mill, that should be okay. Unfortunately, the word ‘should’ has to be used here.

That is because recent changes in health insurance policies and procedures could catch you unawares and affect adversely the handling of a possible future medical situation. Here is a case in point that could have major implications for those living in Santa Clara and San Mateo.

An unexpected ineligibility of coverage

In Santa Clara and San Mateo counties, Stanford is a major provider of healthcare services. It runs one of the two trauma centers in Santa Clara too. Those who purchased an Obamacare health insurance plan after 03-01-2011 with Blue Shield do not have Stanford as a preferred provider.

This has serious financial implications for those living in these counties. If the health insurance company has a preferred provider contract with a hospital or other health facility, the full benefits of the insurance policy are available.  This typically involves a 20% patient copayment after a deductible, which is set to an annual out of pocket limit; it is usually $7,550. The preferred provider has a set fee for each service it provides.

Those with policies purchased after 03-01-2010 will have to pay much more if they go to a Stanford facility. The deductible is double and the copayment rises to 50% of the covered charge. On top of this, the patient will have to pay for uncovered charges.

As an example, take a surgical procedure that costs $100,000. With a preferred provider, the patient pays just the out of pocket of $7,550. Everything else is covered. For the same procedure with a nonpreferred provider, the out of pocket becomes $15,100 and the copayment is $50,000. In other words, the patient will have to pay $65,100 out of the total cost of $100,000.

Those who have policies purchased before 2010 or have Medicare supplements may not have to face this adverse situation caused by this new development.

Where do you stand?

If you live in Santa Clara or San Mateo counties, you should examine carefully your health insurance policy to see if you have the proper coverage you need. Those who live in other counties should also check, if there have been any recently introduced changes that might affect them.

You need to act fast in order to modify or change the policy, if required, and to provide for the best coverage your family deserves. It would be better for you to contact at the earliest an experienced insurance broker, who will be able to give you the guidance you need; ensure that you have made the right decisions.

Friday, October 26, 2018

Who says you’re too old to buy Life Insurance?

The older you are, the costlier life insurance becomes. There is a reason for this. Life insurance companies need to limit their risks: the chances of paying out for a life insurance policy bought by a 65-year-old is greater than one taken out by a 35-year-old. The cost is a major factor that seniors need to consider when deciding on buying a life insurance policy, but it is not the only one.

Do seniors need life insurance?

You have had life insurance for most of your adult life. You bought the coverage so that those who depended on you financially would not suffer if you should die. Now you’re into your retirement years, your children are settled and independent and you have paid off your mortgage. In effect, you have no financial liabilities to worry about.

In such circumstances, do you need life insurance? As in many aspects of life, there is no clear-cut answer for this. What is clear is that deciding to forego life insurance is a major decision, at any age, and you need to consider carefully the ramifications before making a decision.

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Reasons for not having life insurance

These are rather simple:
  • No one is financially dependent on you.
  • Age and possibly health issues have made the premiums too high.
  • You have no debts that your family will be burdened with in the eventuality of your death.
  • You have adequate savings to meet your foreseeable needs.
  • You have all the other insurance coverage you still need like auto, homeowner’s, long-term care and so on.
  • The estate you leave behind will give your family the financial support they may need.
  • The cost of the policy is totally beyond your means.
If all these conditions apply to you, then you may not need life insurance.

Reasons for having life insurance

These are not so simple:
  • Perhaps, not all the reasons given above (for not having life insurance) apply to you. You may need life insurance.
  • You want to leave a legacy that will continue after you are gone. Life insurance is a great way to ensure this. The legacy may not be for your family, it could be for a cause you care deeply about.
  • If you already have a permanent life insurance policy (as opposed to term insurance, which is for a fixed period), cash value will have built up and continuing with the policy makes sense.
  • Paying the premiums does not impose any stress on your finances.
  • Life insurance will give your family money, which they do not need, but will help improve the quality of their lives.

Making the right decision

Life insurance is an area you need to be sure about before you take any decision. You should be able to weigh the pros and cons in a balanced and unbiased manner. This is not easy, because of the financial, practical and emotional issues involved. An expert insurance professional is the right person to help you make the right life insurance decision.

5 Insurance Pitfalls you must avoid

The concept of insurance is simple: you pay a small regular premium; should the situations you are insured against arise, the payout from the policy will give you the finances you need to recover. However, there is a big difference between understanding a concept and putting it into practice the right way.

The terms and conditions of an insurance policy are indeed complex. There is every possibility of making mistakes in arriving at the amount of coverage you require. Consequently, you might get the wrong policy and you are left without the financial resources you need, when you require them the most. Here are listed for your benefit some of the most common mistakes that people make in matters of insurance.

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Having no coverage

This is by no means confined to a small section of the population. If you don’t have coverage, you don’t have protection. The problem is there are so many things you need to protect yourself against. If you own a car, you need auto insurance; but you do not know the type of policy that is right for you.

If you don’t own property, you may not need homeowner’s coverage; but you do need renter’s insurance for where you live. Health insurance is yet another highly complicated field. No matter how healthy you are, you could need it tomorrow, anytime. Should you have disability coverage too in cases where you are seriously injured?

Having too little coverage

Insurance costs money and the larger the policy, the more it costs. The cost of multiple policies together could be disconcerting. A seemingly simple solution would be to reduce the value of the policies; or you may cut back on the types of coverage so that what you pay for insurance fits comfortably into your budget.
That’s fine as long as your life is smooth, and you have no problems. However, what if you need to file a claim and the amount you get is not enough to provide you the money you need to recover? The few dollars saved every month by cutting back on insurance will not save you from the eventuality that has become real.

Having too much coverage

Fear of the worst-case scenarios often drives people to overinsure themselves. This may appear to be a good thing: who will complain about an excessively large payout? However, the effect of paying large premiums for coverage that you don’t really need can have a negative impact on your everyday happiness and comfort.

Having the wrong coverage

It’s easy to get caught up in the idea of protecting yourself and your family from everything you possibly can. Nevertheless, do you really need life insurance, if you have no dependents? Do you need flood insurance, if you live in an arid region with very little rain? The answers to such questions are not always clear-cut. You need to think carefully about various possibilities and options.

Failing to update coverage

Life and circumstances keep constantly changing. A policy that was right a few years ago, may not match your needs today. Not reviewing your coverage regularly to ensure the kind of protection you require could leave you in serious trouble, should things go wrong.

Get professional advice

The right way to avoid insurance pitfalls is to consult an experienced insurance broker, who has the right expertise to help you get the coverage you need at an affordable cost.

Monday, September 24, 2018

Buying Insurance: 5 Common Mistakes

Buying insurance can be confusing. Do you need it? How much do you need? Can you afford it? These are just a few of the questions that arise when you think of buying a policy. This confusion can often lead to mistakes that could leave you without the right coverage of your needs. Five common mistakes given below can help you avoid them when buying an insurance policy.

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Do not assume it is expensive

According to the U.S. Census Bureau, about 30 percent of households do not have life insurance coverage and over 40 million Americans are without health insurance. The figures for other types of coverage too are high. The main reason for these alarming figures is that many consumers mistakenly think that the cost is unaffordable.

That is not really the case: doing some research will often reveal that the actual cost is lower than the cost presumed. While the premium itself may appear to be high, there are usually discounts available that will significantly reduce the cost. For example, insurance companies offer discounts on auto insurance for those who have good driving records, who are members of AARP and so on.

Do not remain insensitive to eventualities

Your family needs keep increasing forever; if you are insensitive to this fact, you may end up with inadequate life insurance. In the case of disability or long-term care, for how long should you seek coverage – a few months or a few years?

Insuring your home for the value you bought it years ago could leave you very underinsured, if property values in your area have risen.  An insurance expert will be able to help you work out the right coverage that will take care of all possible eventualities.

Do not buy insurance considering just the price

The number of clauses, the nuances of their presentation, and the actual wordings can make very confusing the comparison of insurance policies. Many consumers find that the basics of the policies of different companies are all the same. Therefore, they simply presume that it would be fine if they purchase a policy guided just by the cost factor.

More importantly, you need to consider the reputation of the company, the quality of service offered, the exclusions that could lower the policy cost and a few other factors, which appear to be rather insignificant.  For example, the higher the health insurance premium in general, the less you pay when you go to the doctor. What would work for you? Does your property coverage include food spoilage in the event of a power outage? Such considerations prove to be quite beneficial.

Do not ignore the details

Insurance policies are rather long and complex documents. This is not because they are designed to confuse consumers; it is so because of the volume of issues and contingencies to be covered. It's easy to gloss over these terms and conditions, and just look at the cost and the claim payout.

The problem is that the details may, and probably will, contain factors that could affect or reduce the payout. This is another area, where an insurance professional will be able to tell you how, when and where the details of the policy will affect the benefits.

Do not set deductibles too high

The thumb rule is the higher the deductibles, the lower the premium. High deductibles may help your monthly budget. However, in case of a claim due to an eventuality, your high deductibles are not helpful: you need to pay a substantial amount (more than you can afford) out of your own pocket. The effectiveness of the policy and the protection it ought to provide stand substantially reduced.

When buying insurance, you will do well to contact an expert insurance broker, who will be able to evaluate your coverage need and suggest the right policy, at the right price.

Seemingly Rich, Probably Poor!

According to a recent report from the Department of Housing and Urban Development (HUD), a family living in the Bay Area with an annual income of $117,400 can be considered to be in the ’low income’ category. Those with an income of $73,300 are in the ‘very low income’ bracket. A study by the Brookings Institution says that those earning six figure salaries can be considered to be ’poor’. This is not surprising, given the wide variation in earning levels across the U.S.

A lot to feel blessed

Across the U.S., the median household income is $91,000 for a family of four. It is estimated that more than 40 million people in the country live on less than $25,100 a year, which places them below the poverty line. Between 2008 and 2016, salaries for full-time workers in metropolitan San Francisco rose by 26%, faster than any other part of the country. Dallas is in the second place with an increase of 14.4%. Those living in the Bay Area, therefore, have a lot to feel blessed.

 A lot to protect

The people of the Bay Area in general, and San Franciscans in particular, have deservedly earned their high incomes. The area is a hub of high-tech industry, which has triggered the economic boom. What many of those people do not realize, however, is that the other side of ‘increased prosperity’ may be the probability of ‘increased losses’. This situation issues from the failure to act when you have a lot to protect. A million dollar home is nice to live in; but rebuilding in case of its unexpected destruction will cost a lot more than a million.

The same holds true of expensive cars and similar possessions. In the event of the death of an earning member of the family, the effect of the loss of income is correspondingly huge. It was on that income that the future of the family depended entirely, and to shatter those hopes is to rob the family of its future.

Insurance: the best protection

Insurance is the best way to protect a family from loss, no doubt. However, it must be of the right type and for the right amount. According to recent research, about 60% of homes in America are underinsured, approximately by 20%. In other words, if a home worth $500,000 is destroyed, the family will have to raise $100,000 on their own to cover the rebuilding cost.

The three main reasons for this debacle are: (1) people have not recalculated the value of their homes over the years; (2) they have not updated their policies after making improvements or additions to their homes; (3) they have fallen victim to the ‘it-happens-to-the-other-guy-not-me’ syndrome. The same problem afflicts life insurance: higher costs associated with rising standards of living are overlooked, and policies not updated. Health insurance is yet another similar problem area.

Importance of professional guidance

Most people know what they need to insure but not how much to cover. Finding the right balance between the cost of the policy and adequate coverage is never easy. That’s where the insurance professional plays a critical role. They have the expertise and experience to assess your insurance needs, and to customize the right policies for you and your family and ensure the kind of security you want.

Thursday, August 23, 2018

Insuring your Second Car

Say, you have bought for your own use a second car, or one for a teenager who is now driving, or a son who got married or moved in with a friend. It would make a lot of sense to add this second car to your existing auto insurance coverage, instead of having two separate policies. It’s easy and simple as well.

Most insurance companies limit the number of cars that can be included in one policy. This number varies from company to company, but it is typically 3 or 4. As long as you do not exceed the limit, you face no problems. Here is how to go about adding a car to your policy.

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Collecting vital information

Collect all the essential information about the new car. This includes name, model, year, license plate number and the Vehicle Identification Number (VIN). Ensure that all the information you have collected is completely accurate, because any errors in the data submitted could be cause enough for turning down a future claim.

Contacting the insurance company

Get in touch with your insurance company. Some companies allow you to modify a policy online. If that is possible, find the relevant webpage for policy modification and provide the information. If that is not possible, call the company helpline, and they will walk you through the process.

Working out the right coverage

Decide on the coverage you want for the second car. It does not have to be the same as that for the first vehicle. You can reduce or increase the coverage, adjust the deductibles and so on. This is one area where it is easy to make a mistake and this is where the advice of an insurance professional could be of great help.

Checking the rates

Check how the addition of the second car to the existing auto insurance policy will affect the rates. Normally there is an increase in the cost of the policy due to a number of factors. For example, if the second car is expensive or is known to be accident prone, the increase may be high.

On the other hand, if the second vehicle is an inexpensive one and is known to be safe, it is possible that the rates are lower. The insurance company may think that your accident risk is low due to the availability of a safer vehicle.

Moreover, adding a second car to a policy may qualify you for a multi-car discount in some cases. Here again the guidance of an insurance broker can be of great help in arriving at the right coverage at the right cost.

Doing it the right way

Therefore, the addition of a second car to an auto insurance policy may not involve any significant additional cost. It may even bring the rates down. These are important factors no doubt for you to consider; but the first thing is to ensure that you have the right coverage and that both the vehicles are fully protected. Contact your insurance broker at the earliest for expert professional advice on all these issues.