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.


Image Courtesy : Pixabay.com
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.

Image Courtesy : Pixabay
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.

A Home Insurance Renewal Checklist

What do you do when you get your homeowner's insurance renewal notice? Do you switch over to autopilot and send off the payment asked for without even looking at your coverage? If you say ‘yes’, yours is not an isolated case: it’s exactly what most people do! This is because what was good enough last year, the year before and for many preceding years, must be good enough for now, they think!

Unfortunately, that is often a very wrong assumption. The value of your home along with all your possessions must have grown over the years. The coverage you had opted for a couple or more of years ago may not be enough today to give you the protection you need.

The renewal notice should be treated as an opportunity to take stock, and fine-tune your coverage to meet your current needs. This does not always mean ‘pay more’. Here are four questions you have to ask when a renewal is due.

Are you eligible for discounts?

You could be eligible for a discount on your policy if you had recently paid off your mortgage, or done some home improvements like putting up a new roof, installing a security system and/or smoke detectors, fitting a sump pump and so on. The amount and type of discount will vary depending on the type of policy and the insurance company.

You could also consider increasing your deductibles. Check with your neighborhood association whether bundling your home and car policies will qualify you for discounts and save you money. Your insurance broker is the best person to help you understand both the coverage you need and the savings you qualify for.

Have you done any remodeling or renovation?

It’s easy to underestimate the value of your home after small renovations. If you have had any work done recently, your home may be worth more than what you think; your insurance coverage must correspond to its real value as of today.

Has your liability increased?

If there are changes in your home that could increase your liability, they ought to be taken into account when you renew your policy. It is surprising how even common things like getting a dog (even the most good-tempered can bite if provoked), or putting up a swimming pool can increase your risk. Renewal is a good time to revisit your liability and ensure that you have the protection you need.

Is your inventory up to date?

The increase in your possessions and their value is something that may go unnoticed. Take a walk around your home and look for items that you have acquired over the last few years, but not covered under your policy. If some or all have significant value, this is the time to modify the coverage to include them. If you have bought things expensive, check if the coverage for them is subject to limits and if special coverage is necessary.

You need to go into all these issues rather closely to ensure that your home insurance coverage is what it should be. Your insurance broker is the right person to walk you through the complexities, and make certain that you have the right coverage at the right cost, with the best discounts.

Monday, July 23, 2018

How much Long-term Care Insurance do you need?

Although major sickness can strike at any age, the chances of suffering from a long-term medical condition increase as you get older. Requiring long-term care in your senior years is bad enough. It is even worse if you feel that you are a financial burden on your family because of your medical bills then. A well-planned long-term care insurance will give you the financial resources to manage expenses arising from chronic or long-term debilitating sickness.

While an increasing number of people realize of late the importance of having long-term care insurance, they may not have the coverage they need. Long-term care insurance is not a one-size-fits-all type of policy. If you have questions on long-term care insurance or the right quantum of coverage, here are a few important facts to keep in mind.

Image Courtesy: https://health.mil/

  • Resources cushion: Long-term care insurance should be part of your retirement planning. What assets and income sources will be available to you in your senior years? Can some of these be devoted to possible long-term care needs? What kind of insurance is needed to cover the gap between resources and care costs?
  • Place to retire: The place where you plan to live after retirement is a variable factor in arriving at the cost of care; it varies not only from state to state but also from city to city.
  • Duration of care: The duration of the long-term care will have a major impact on the cost and the policy you need. While it is not possible to predict an ideal duration, the typical care period is around 3 years. Genetic and hereditary diseases like Parkinson’s or Alzheimer’s can significantly increase the duration.
  • Health history: Your current and past health history and any recurring medical issues in the family over the last few generations would be important inputs. Those details would have a direct bearing upon the probability of long-term care need and the required duration of care, which in turn would help arrive at the type and quantum of insurance.  
  •  Inflation factor: Buying a long-term care coverage policy at an early age has the advantage of a low cost; but it may be many years before you may need the care and make the claim. Therefore, inflation should be factored into the amount of coverage that you opt for.

Planning: essential though unpleasant

Sentimentally, no one wants to think about prolonged medical care, especially in old age. Everybody would prefer instead to keep perfectly fit until the last breath. Nevertheless, it is too important a subject to ignore. Do not mistake long-term care for end of life care: they are two different things.

Long-term care is medical treatment and nursing for an extended period until you recover. End of life care refers to the care you need when you are in a terminal condition. Long-term care coverage affects how well and how fast you can be expected to recover.

Guidance of an expert

The financial situation of every person/family is different from every other. The factors outlined above will give you an idea of the kind of coverage you need. However, insurance is a complex matter: making mistakes and miscalculations is easy.

Discuss your insurance needs with an expert insurance agent who will be able to guide you to the right long-term care insurance policy at the right cost. It does not take long and the peace of mind you get will be lasting.

California State: Second Most Vulnerable to Natural Disasters

Natural disasters cover a wide range of natural phenomena including hurricanes/tornados, earthquakes, floods, fires and so on. California, called the ‘Golden State’, is truly a great place to live. Ask Californians if they would like to live in another part of the country; surely a majority of them will say ’No’.

However, California has its fair share of calamitous occurrences and the Californians take them in their stride. According to Federal Emergency Management Agency (FEMA), California is the number two state most prone to natural disasters. A few of the worst disasters of the last 100 odd years that devastated California are listed below. 

Image Courtesy: https://upload.wikimedia.org/

  • 1906 The San Francisco Earthquake: More than three-fourths of the city were severely damaged or destroyed, and over half the population was left homeless.
  • 1923 The Berkeley Fires: The fires gutted multiple city blocks and almost 700 buildings.
  • 1964 The Christmas Flood: 19 people died, and damage of a scale of over a $100 million occurred in Humboldt County.
  • 1982 The Alpine Meadows, Tahoe North shore Avalanche: This is the deadliest avalanche ever recorded in North America.
  • 1989 The Loma Prieta Earthquake: The images of the havoc caused remain seared in the minds of San Franciscans even today. 63 people were killed and 3757 injured.
  • 1991 The Oakland Hills Fire: Over 800 buildings were destroyed and 25 people died.
  • 2015 The Valley of Fire: Over 1,300 homes and almost 80,000 acres of land were burnt in Napa, Sonoma and Lake County.
  • 2015 onwards Savage wildfires: They are now a regular part of summer.
  • Many more have made headlines.

Survival and recovery

Surviving a natural disaster is a matter of preparedness and luck. There will of course be state and federal aid forthcoming to help survivors face the immediate aftermath. However, these are not meant or sufficient for recovery and rebuilding lives. The victims often find that their homes and sources of livelihood are demolished. The only protection, if they have one, is the insurance coverage.

It is insurance that is likely to help rebuild homes, restart businesses and keep families protected and fed. Unfortunately, many Californians are either uninsured or underinsured. This is due to a feeling that disasters always happen to ’other people’, not ‘us’. Many of those who were unable to recover from the disasters listed above too thought so.

Insurance: The Best Protection

Do not remain unprepared for calamities, taking your insurance for granted. You may feel you are well protected, but in reality, you could be underinsured or there may be gaps or catches in the coverage that you are not aware of.

It is best to contact an experienced and reputed insurance broker  at the earliest. They will  examine carefully whether you are sufficiently protected from natural disasters, and whether you need any additional coverage.

Hopefully, you will never ever need to file a claim. Nonetheless, a carefully planned insurance that covers all possible eventualities would surely give you immense peace of mind that you CAN rebuild your life come what may!

Friday, June 22, 2018

Stay Protected this summer with an Umbrella Policy

Summer is here and millions of Americans will be hitting the road to travel and make the most of the sunny days with occasional rains. You and your family will probably be among them. You may have the safest of vehicles and be an excellent driver, but there are factors beyond your control that could affect your safety on the road.

An accident could occur at any time for no fault of your own. Fender benders are no big deal, but if it is a major accident resulting in major vehicle damage, serious injury or in the worst case, the death of someone in the car, you depend on insurance to get you through the terrible time.

Nevertheless, what happens if the driver at fault does not have auto insurance or has inadequate coverage? How will the medical and other expenses be covered? This is where an umbrella insurance policy can save you.

Image Courtesy :https://encrypted-tbn0.gstatic.com/
This could happen to you

Peter and Martha along with their children are driving to the neighboring town for a party. The car is in good condition and Peter is a safe driver. However, the kids in the back seat soon start fighting, and this distracts Peter. He pulls over to stop the quarrel and pacify them; still distracted a bit, pulls out into the traffic without checking for other vehicles.

You are out for a Sunday drive with your family, when Peter suddenly pulls out in front of you. There is no time to avoid the imminent accident; your car is badly damaged and all of you in the car suffer major injuries.

You all need hospitalization, surgeries and long rehabilitation. If Peter is underinsured and his policy is not enough to cover your expenses, what happens? You could sue him for the money, but that will be a long battle, and he could declare himself bankrupt, in which case you are back where you started. If you have an umbrella insurance policy, that will kick in, after Peter’s policy is exhausted, to cover your medical expenses. It's as simple as that.

Obviously, this is a worst-case scenario. You hear reports of things like this always happening to others, and thank God for that. However, there is no absolute certainty that it will not happen in your case. Maybe in other contexts, what you thought the remotest possibility would have taken you by surprise by becoming a reality. Umbrella insurance is a very inexpensive way to get the extra protection you need even in a worst-case scenario.

Why an umbrella policy?

Umbrella insurance is a simple and safe way to protect yourself from situations where other insurance coverage is not enough for your medical and other expenses. An umbrella policy can also cover pain and suffering as well as emotional distress and lost wages. It is the most cost-effective way to get the extra coverage you need to remain protected.

Consult a reputed insurance broker to know more about the advantages of an umbrella policy; they will tell you what kind of coverage is right for you.