Does your insurance policy cover “acts of God?” (image via google)

If you own a car, own a house, or have a family, it’s a good bet you have some kind of insurance.  Odds are you have at least some kind of coverage for the car you drive and the place you live.  If you have personal insurance, you understand the importance of protecting yourself, your financial future, and your property.  But even savvy insurance consumers don’t always know all the ins and outs of their policies.  Here are 4 things customers commonly do not know about their personal insurance policies.

1.     Your Car Insurance Won’t Buy You a New Phone

If you have car insurance and your car is stolen, you know your policy will replace your car or reimburse you for its loss.  But, most car insurance policies will not replace or reimburse you for any personal property that was in the car at the time it was taken.  This also holds true for items stolen from your car.  Let’s say you leave your laptop under the backseat and your cell phone in the center console and someone breaks the window and steals both.  Your car insurance will cover the cost of repairing the window, but you are on your own for the loss of your laptop and phone.

2.     Losing Your Home Won’t Make You Homeless

One thing many people don’t realize about their homeowner’s policy is that it provides for the payment of expenses you incur if you have to live somewhere other than your home for a period of time while repairs are made.  For example, there is a fire in your house that causes significant enough damage that you will have to live somewhere else for 6 months; your policy will pay for the initial stay in a hotel as well as your rent and some other expenses.

3.     Life Insurance Benefits are Not Automatically Tax Free

If you die, the proceeds of any and all life insurance policies go to your beneficiaries’ tax free, right?  Not always.  Whether or not your life insurance payout will be subject to taxes completely depends on the details of your policy.  If you have a term policy where you are the policy owner and your spouse is the beneficiary, if you die during the policy term, the payout will likely be tax free.  However, if someone else, like your parent is the policy owner, there may be tax implications.  Talk to your insurance agent and an accountant to ensure you have a complete understanding of any tax implications.

4.     Natural Disasters are Not Generally Covered

An unfortunate truth in the world is that Mother Nature is unpredictable and sometimes leaves devastation in her wake.  Another unfortunate truth is that many of these disasters are excluded from standard personal insurance policies.  While most people know that flooding is not covered by their homeowners policy, they don’t realize that damage caused by tornados, earthquakes, and other “acts of god” is not covered without purchasing additional coverage.

The best protection you have is to read your policy all the way through and make sure you understand all its provisions and exclusions.  If you are unsure about whether or not something is covered, ask your insurance agent for clarification.

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Does your business need Kidnap Ransom Insurance? (image via google)

When it comes to insuring your business, there is basic coverage and what is called specialty coverage.  Basic coverage is the standard type of insurance almost every business needs to have, property, liability, business auto, and worker’s comp.  Specialty coverage is less standard and is provided to cover specific types of risks some businesses face and therefore must mitigate.

There are a wide range of specialty insurance products that are industry specific.  If you are an exporter, you will need Ocean Cargo coverage.  If you are a financial advisor, you might need special coverage specific to any fiduciary responsibilities you might have.  As these products can be very industry specific, you will want to talk to your agent, check with any professional organizations you belong to, and ask your industry contacts for more information on the specific types of coverage you need.

There are also a few specialty products that may be needed across a variety of industries.  Here is a brief overview of each of these types of coverage and information on what kind of businesses may need to secure it.

Key Employee Life Insurance

Regardless of how big your business is, there are likely people within in, including yourself, that may need separate life insurance policies in order to protect the company.  Generally when we talk about life insurance as it relates to an employee, it is the life insurance policy the company provides or arranges for the employee.  The beneficiary is chosen by the employee and the intent is to take care of the employee’s family in the event of their death.  Key employee life insurance is exactly the same except that the beneficiary is the business and the intent is to help the business recover from the loss of a key employee.

Businesses whose income is completely generated by or reliant on the participation or involvement of specific people may need to purchase this type of policy.  Law firms, doctor’s offices, financial advisors, and small business owners are all examples of the type of business that can benefit from this type of policy.   Generally, this type of policy is a term life policy and it only remains in effect so long as the employee is employed by the business.

Kidnap and Ransom Insurance

Around the world, research shows that criminal gangs kidnap an estimated 25,000 people each year with the sole intent of collecting ransom payments and making money.  In many countries, kidnap and ransom is an industry bringing in millions of dollars a year.   For businesses operating in these countries, this fact can pose significant risks to employee welfare and financial health.

A kidnap and ransom policy is designed to provide a limited amount of protection for businesses operating in these areas of the world.  The type of policy determines what expenses and costs are covered.  Most individual polices will not cover the cost of the actual ransom payments but does include the expense of negotiating the ransom and securing the safe return of the person who was kidnapped.   Most corporate policies cover negotiation expenses, ransom payments, and lost wages owed to the kidnapped employee.

Companies of any size that are operating in parts of the world where kidnap and ransom activities are prevalent need this kind of coverage.

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Do you know losing a job will affect your insurance? (image via fairfaxcounty on flickr)

Times are tough and the economic turmoil of recent years continues to claim jobs almost every day.  The loss of a job presents problems on several fronts, first and foremost, the loss of income.  For many people who become unemployed, this problem overwhelms any others and makes it difficult to see how losing a job impacts other areas of your life.  Unfortunately, not dealing with these other areas can lead to more problems down the road.  One of these areas is your insurance coverage.

The last thing you need when you lose your job is to add to your family’s financial burden by purchasing insurance policies.  However, if you are like most people, you have been getting at least some of your insurance coverage through your employer.  Some of this coverage, like health and disability coverage was provided by your employer.  Other types of coverage like life, auto, and even homeowner’s coverage were purchased through your employer.  When your job goes away, in almost all cases, so does this coverage.   You may find yourself without life insurance, auto coverage, or a homeowner’s policy which further endangers the financial future of your family.

Here are things you must consider in terms of your insurance policies when you lose your job.

Health Insurance

Most people will have the option of continuing employer offered health insurance through the COBRA program once their employment ends.  This can be a lifesaver for families where the primary insurance provider suffers a job loss.  However, be prepared to pay significantly more for the same coverage.  Shop around to see if you can find an individual policy that is more cost effective.

Life Insurance

If your life insurance was provided by or through your employer, you will need to find a new individual policy to meet your life insurance needs.  This should be a top priority in order to protect your family’s future.  Temporary loss of your income is challenging enough; don’t take the chance that the worst happens and your family must figure out how to move forward without you while also dealing with the permanent loss of your income.

Disability Insurance

Life insurance is important, but disability coverage is just as important, especially for those in their middle years with families.  People in this age group are actually more likely to become disabled than to die, according to the Social Security Administration. This means that protecting your family’s finances may mean you need to secure a disability insurance policy that is separate and distinct from your employment.

Auto and Home

Many employers offer group insurance coverage for auto and homeowner’s policies that enables their employees to purchase this coverage at a discount.  When your employment ends, these policies may remain in effect but the cost to keep them may increase because you are no longer part of the group.  There is also a chance that this coverage will no longer be available.  Make an appointment with your insurance agent to discuss these policies and make sure you have the coverage you need at the best possible price.

Losing a job is difficult enough; make sure you don’t compound the problem by failing to attend to your family’s insurance needs.

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http://www.iii.org/articles/life-stages/employment-change.html

Do you have an adequate amount of life insurance? (image via Tetra Pak on Flickr)

1.    Your life insurance needs are as unique as you are.

There is no such thing as a one size fits all life insurance policy which is one reason it can take longer to get a life insurance policy in place.  The key to achieving your life insurance goals is to know what you are trying to achieve and then buy a policy or policies that allow you to achieve them.

2.     The life insurance you get through your employer may not be sufficient.

Many people have a basic life insurance policy through their employer and assume that this is all they need to do from a life insurance perspective.  Unfortunately, if that policy doesn’t match your needs, you may not have the coverage you need.

3.     Relying solely on employer offered life insurance may leave you with no coverage.

Even if your employer offered coverage meets your needs, if you leave your job or lose your job, you may find yourself without any coverage.  The older you get, the more your life insurance premiums will be if you purchase a new policy and if you get a serious illness, you may not be able to get coverage at all.

4.     The insurance you need will change over the course of your life.

The life insurance you need when you have small children and a mortgage is very different than what you will need when you are an empty nester on the verge of retirement.

5.     Match your policy to your needs.

The amount of insurance you need changes as you move through your life.  This is why it is important to match the amount of coverage you have to your needs.  A mixture of whole and term policies can enable you to vary the amount of coverage you need over your lifetime.

6.     Tell the truth on your application. 

You will be required to undergo some kind of medical evaluation in order to obtain most life insurance policies.  If you are not up front on your application, it may cost you your coverage right away or compromise your beneficiary’s ability to collect.

7.     Your premium will depend on your health at the time of purchase. 

The amount of your premium will depend on several factors, one of which is your health at the time of your application.  Medical conditions like high blood pressure or high cholesterol can increase your premium, even if they are controlled with medication.

8.     It saves to purchase your policies when you are young and in good health.

The amount you pay for a life insurance policy is generally set for the life of the policy when you purchase the policy, no matter how many years you have the policy.  This is one reason that it makes sense to purchase coverage when you are younger rather than waiting until you feel like you can afford it.

9.     Understand the policy terms.

In order to compare policies from different companies or even within the same company, you need to read through and understand the terms of the policy.  You also need to understand if there are any conditions so that you don’t inadvertently do anything that compromises your coverage.

10.  Shop around for the right policy at the right price.

Different companies have different offerings and use different pricing models.  You may be paying for this policy for 30 years or more and it makes sense to make sure you are getting the best price for the coverage you need.

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Employees

Good group benefits can help you land a great employee. (Image via Inkyhack on Flickr)

There are many factors that contribute to having a happy, productive workforce.  Human resources experts could give you a list a mile long of why things like company culture, employee appreciation, and providing meaningful work for a living wage would be near the top of that list of factors.  Group benefits, the ones that are optional, not the ones required by law, would also be up near the top of the list.  Group coverage often fulfills more than one need for your employees and can be a powerful way to express the company’s gratitude and appreciation for all the work employees do.  Providing these kinds of benefits can even be the thing that sets your company apart in the eyes of potential employees.

Here are 5 reasons small business owners should consider adding group benefits for their employees.

1.     Providing Peace of Mind

Two of the most common group benefits are life insurance and disability insurance, both of which protect the financial future of the employee and/or their family.  With these kinds of group benefits, employees can feel confident in their ability to support their family in trying times.

2.     Cost Control

The group nature of the benefits helps keep the costs down which means the company can offer things like health insurance or dental coverage because they are affordable.  It is also common practice to require that employees contribute toward the cost of many group benefits so that the costs are shared.  When you add in cost savings you may achieve by reducing turnover, benefits make good financial sense for most businesses.

3.     Tailored Solutions

Most insurance companies that provide this type of coverage will allow you to tailor the type of benefits you offer to meet the specific needs of your employees.  Additionally, there are other things, like subsidized gym memberships, which can be counted under the group benefits umbrella that are not related to or provided by an insurance company.

4.     Benefits Support

Many insurance programs offer support for their group benefits product lines that can provide real benefit to the business owner or manager.  When a group benefits package comes with this kind of support, it alleviates the need for HR staff or business owners to take time away from other things in order to answer questions.

5.     Recruiting and Employee Retention

One of the best reasons to offer group benefits is because benefits make employees happy and happy employees don’t leave for other opportunities.   The cost to the company of finding, hiring, and training a new person is likely much higher than the company’s contribution to the cost of benefits for that role.  If you are looking to attract the best and brightest people, you need to offer a work environment that doesn’t just compare with the completion, but surpasses it.  Group benefits can be the thing that turns your job offer into a candidate’s best offer.

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Marriage

Are you properly insured after a major life-changing event? Image via cheesy42 on Flickr

Many people don’t realize that different life events can have an impact on their insurance needs as well as their insurance premiums.  You might think that turning 25 will bring your auto insurance down or realize that getting married means you need to combine your coverage into a single policy, but there are many other ways that major life events can impact your insurance.   A survey conducted by Trusted Choice and reported in Insurance Journal found that more than 30 million U.S. households have insurance policies and/or coverage that don’t fit their current needs.

Here are 3 of the major life events that can change what kind of insurance you need, how much insurance you need, or how much your insurance costs.

1.     Getting Married

When you tie the knot, your insurance needs and costs can change in a couple different areas.  First, your car insurance rates may go down because you are married and combining policies may qualify you for a multi-car discount.  If you are purchasing a house, you will need a new homeowner’s policy.  If you are moving in together but renting, you will want to combine your renter’s insurance and make sure the coverage limits of the policy are enough to replace both of your possessions.  Regardless of whether you are a renter or a homeowner, you may want to make sure your property replacement coverage will cover your wedding rings.  Finally, now that you are married, your life insurance needs may be drastically different and should be reviewed.  Even if you have enough insurance, you will likely need to make beneficiary changes at a minimum.  Talk to your insurance agent to make sure the coverage you have is the coverage you need and that you aren’t paying more for it than you should be.

2.     Getting Divorced or Becoming Widowed

A change in marital status can mean that you need to make changes to your insurance coverage.  Going from two cars to one, moving to a smaller house, selling valuables, and splitting assets can all result in the need for less coverage and lower limits.  This can be a big cost savings for you that you may not think of during such a difficult time.  You will also want to change any beneficiaries on life insurance or other policy payouts.

3.     Having Children

Becoming a parent for the first time or the last time is a big change and it can mean you need to make changes to your insurance coverage.  According to a life insurance fact sheet put out by LIMRA, almost 70% of U.S. Households with children under 18 would be in jeopardy and destabilized financially if the primary bread winner died.    If you have added a new family member by birth or adoption, it is a good idea to sit down with your insurance agent and make sure you have enough life insurance coverage to meet the needs of your family and that beneficiaries are designated properly.  You may also want to review your auto and home insurance policies to ensure that coverage limits are adequate for your larger family.

While these are 3 of the major life events that can affect your insurance costs and needs, there are several other events that should trigger a review of your policies with your agent.  If you have a new teenage driver, buy a vacation home, have a significant change in income, buy or inherit valuable property, or as you get ready to retire, sitting down with your agent can make sure you and the ones you love are protected.
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Elderly Couple

What type of life insurance is right for you? Image via John Starnes on Flickr

When it comes to insurance, people often wonder how much is enough.  For life insurance, the answer can be a little more complex than for other types of insurance.   When you are looking for coverage for a car or house, you can formulate things like replacement value and estimate how long it would take to rebuild in order to determine the right amount.  But when you are talking about your life, it can be harder for people to turn the magnitude of that loss into a monetary amount.

Life insurance also differs from other types of insurance because different people have different goals and different needs.  When someone buys a homeowners insurance policy, their goal is to enable them to replace their home and belongings in the event of a catastrophic loss and to protect them from liability claims if someone is injured on their property.  Life insurance goals are not that clear cut.  Some people are looking to their life insurance to provide for their children while others may be looking at it as an investment opportunity.  There are a variety of reasons that people purchase life insurance policies, so the answer to how much life insurance do I need is- it depends.

Here are some things to consider that will help you figure out how much life insurance you need.

  1. Your Goals

The first thing you need to decide is why you want life insurance.  Ask yourself these questions to help define what you want to achieve by purchasing life insurance policies.

  • What do I want my life insurance to provide?
  • Will any of those things change as I grow older or will they be the same as they are today if I live to be 100?

Some of the most common goals people have are enabling a spouse to pay-off the mortgage or other debt, providing funds to raise children or send them to college, and supplementing their investment portfolio.  It is important to understand what you want to accomplish with your life insurance because those goals will drive the type of policies you purchase and the amount of coverage you need right now and in the future.

  1. Your Life Stage

The life insurance needs of a married couple will change over the course of their lives, even if their life insurance goals remain the same.  This is why considering your life stage is a crucial factor in determining the right policies for you.  Let’s say the life insurance goals of a married couple are to ensure there is enough money for final expenses, to pay off any debt, and to provide income replacement for at least 3 years to give the family time to adjust to the loss.  If that couple is in their early thirties with two small children, two incomes, and a mortgage, they will need a much higher payout at that point than if they are retired with no debt and two grown children.  Considering how your financial obligations will change over time ensures you buy the right amount of coverage at the right time to achieve your goals.

Once you have thought through your goals and the anticipated fluctuations of your financial obligations, sit down with your life insurance broker or agent to discuss what you want to accomplish.  They can help you find the mix of policies that will provide the protection and peace of mind you need at the best possible price.

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