Mama, don’t let your babies grow up to be fishermen, pilots or roofers — at least if you want them to find reasonably priced life insurance.
Some professionals, such as bomb disposal experts, should expect that their job is going to make it difficult to buy life insurance. (It’s just one of the hazards of having a job with a deadly weapon in its name.) But other workers may have no idea that their profession is deemed high-risk by insurance companies.
“The truth is consumers don’t think they are in high-risk professions,” says Mike Kilbourn, president of Kilbourn Associates in Naples, Florida. “A roofer doesn’t think he will pay more because he stands on a roof all day. And he might not find out until the application is submitted to the insurance company.”
How life insurance companies size you up
Life insurance rates are generally based on the policyholder’s life expectancy. Insurers will examine numerous variables to predict your lifespan, including your age, gender, nicotine use, alcohol use and health history – plus extra risk factors such as your occupation and hobbies.
Insurers often offer people in risky occupations “rated” policies – if they offer them policies at all. Compared to policies for people in “ordinary” careers, rated policies will cost policyholders extra money in premiums every month.
That doesn’t mean, however, that all insurers take the same view on dangerous professions.
“Not all companies rate a particular risky profession the same, and thus the premiums for the same coverage can vary significantly between companies,” Kilbourn says. “So, a person who applies for life insurance may be approved at a ‘standard’ rating by one insurance carrier, yet be rated as a ‘substandard’ by another – even with the very same information on their insurance application.”
This is good news for those who have been denied policies by one or more companies because of their risky job. It means they may still be able to find an affordable policy, provided they’re willing to shop for thebest life insurance company for their needs.
Unsure whether you’re in a risky line of work? These occupations have the 10 highest fatal work injury rates, according to a 2014 report by the Bureau of Labor Statistics. If you’re employed in one of them, don’t be surprised if your insurance agent raises an eyebrow when you submit your application.
Falling trees, gusting winds, buzzing chainsaws, unpredictable terrain and dangerous wildlife are just some of the factors that make logging a calamitous profession. Its fatality rate is 91.3 deaths per 100,000 workers. (For reference, the national average fatality rate for U.S workers is 3.2 deaths per 100,000 workers.)
2. Commercial fisher
Harsh weather, heavy equipment, unrelenting sun exposure and sleep deprivation are among the risks taken by commercial fishers. Their fatality rate stands at 75 deaths per 100,000 workers.
3. Aircraft pilot/flight engineer
High stress and long hours take their toll on commercial airline pilots, search and rescue pilots, and flight engineers. Test pilots court risk while pushing equipment to the brink, while crop dusters are exposed to a host of chemicals as they fly low near power lines and other hazards. The death rate of pilots and flight engineers is 50.6 deaths per 100,000 workers.
Some roofers might be surprised to learn that their profession’s fatality rate of 38.7 deaths per 100,000 workers gives it the fourth-highest rate of fatal injuries. But it’s hard to get around the inherent dangers that come with working on an elevated surface virtually every day.
Farmer and ranchers face many of the same hazards as loggers, but with an extra peril: tractors. The leading cause of death for farmers and ranchers involved overturned tractors, according to the CDC. The rate of death among farmers is 21.8 per 100,000 workers.
There are so many mining disasters that the Mine Safety and Health Administration breaks down the tragedies by specific variables. But rampant news coverage of mining disasters may be increasing safety awareness in this industry. Although fatality rates naturally vary by year, after the CDC reported 70 fatalities in 2010, that number dipped to 35 in 2012 and the BLS report, which looked at data from 2013, found a fatality rate of 26.9 per 100,000 workers for mining machine operators.
7. Refuse and recyclable collector
You may tip your garbage collector every Christmas, but it’s possible he deserves more for the risks he takes. Working with heavy, potentially hazardous equipment, jumping on and off moving vehicles and exposure to chemicals brings this job’s fatality rate to 33 deaths per 100,000 workers.
8. Truck driver (and others who drive for work)
The sprains, strains and exhaustion of truckers are just part of this story. The Occupational Safety & Health Administration reports that more of these workers are killed or injured on the job than any other occupation in the U.S., due in part to the heavy equipment, chemicals and on-the-road perils involved in this work. The occupation ranks seventh on the BLS list – at 22 fatalities for every 100,000 workers – with truckers and those that drive as part of sales jobs combined.
9. Electric power line installer/repairer
Working with high voltage while high in the air is dangerous enough on clear, sunny days. But many of these workers install and repair the lines at night and in nasty weather, bringing this occupation’s fatality rate to 21.5 deaths per 100,000 workers.
10. Construction laborer
Collapsing scaffolds, falls and electrical shocks are some of the fatal hazards cited by OSHA that bring the death rate of construction workers to 17.7 deaths per 100,000 workers. The BLS found that half of all contract workers who were fatally injured in 2013 were working in construction.
How to get life insurance with a dangerous job
Workers in dangerous professions are often still able to get life insurance, though they may not like the cost of it.
But as with people in nonrisky professions, the best way for high-risk workers to find the most affordable life insurance quotes is to be diligent and shop several different companies.
Steven Schwartz, vice president and practice leader of the Executive Benefits division at HUB International in Northeast, New York, notes a particular client who was quoted a $5,100 annual premium by one company before turning to Schwartz, who secured him a $1,700 annual premium from a different company. That’s a savings of $3,400 a year (or nearly $70,000 over the life of a 20-year term life policy).
Krystalynn M. Schlegel of M.G. Schlegel & Associates, Inc., an estate and business planning brokerage in Novato, California, agrees that matching a client with their ideal insurance company is crucial.
“Oftentimes, if I have a client with a high-risk profession I will write a cover letter to the insurer explaining the specifics, supplying credit reports, driving records and personal details such as if they go to church, if they have kids,” she says. “That helps (the underwriters) understand them better.
And don’t forget: If you’re in a high-risk job when you obtain your life insurance policy, but change to a safer profession later on, you can petition your insurance company to reconsider your premium.
If you are the beneficiary on a recently deceased person’s life insurance policy, you need to file a claim for the death benefit. If you don’t, you probably won’t see the money and you definitely won’t be alone: Unclaimed life insurance benefits total at least $1 billion, according to Consumer Reports.
Don’t think that it’s greedy to think about life insurance after a person’s death. The purpose of having life insurance is to help loved ones cope with the loss. The financial needs that arise soon after a family member’s death can be significant, so there should be no shame in pursuing the money that the deceased wanted you to have.
Here are the steps to take to do this.
1. Get the policy details
With any luck, you’re already aware of the deceased’s life insurance policy and where it is located. Ideally, it will be stored in a safe place such as a metal filing cabinet or fireproof lock box.
However, you could have a slight problem if the policy was kept in a safety deposit box at the bank.
“In most states, safety deposit boxes are sealed temporarily upon one’s death, which could delay settlement,” says Whit Cornman, a spokesman for the American Council of Life Insurers.
If you’re unsure of where the policy details are, common places people store important papers are nightstands, desk drawers and bookshelves. It’s possible the deceased had life insurance through work or bought a policy independently from a life insurance company, so insurance agents and human resources personnel may also be helpful in tracking down policy information.
2. Check for other policies
Even if the deceased never mentioned them, there may be other insurance policies in place. These can include accidental death and dismemberment policies, which employers sometimes offer as riders to their insurance policies. Again, checking with the deceased’s human resources representative can be helpful here.
If the deceased was killed while traveling and had travel accident insurance, you may be entitled to additional benefits. Check with representatives from the credit card used to buy the tickets and travel, as well as the road clubs to which the deceased belonged.
You should check for government benefits as well, says Insure.com Managing Editor Robert Beaupre.
Surviving spouses and children may be eligible for a small Social Security burial benefit, or for monthly survivor benefits. If the deceased served in the military, you may be eligible for some benefits if he or she served in a war zone or a service injury contributed to the death.
3. Contact the agent
You should notify the insurance company as soon as possible that the policyholder has died. Once you have found the life insurance policy, look through it for a contact name and number. If you know the name of the life insurance agent who sold the policy, he can help you file your claim.
“He can act as an intermediary with the insurance company,” Cornman says. If you don’t know the name of the agent, you should contact the life insurance company directly.
If the deceased had group life insurance through his employer, you can contact the human resources department at the employer about your claim. The deceased’s pay stubs might indicate whether charges for additional group life insurance coverage occurred each month.
“If you are unable to contact the employer, you can contact the life insurance company directly,” Cornman says.
4. Obtain copies of the death certificate
When filing a claim for the proceeds of a life insurance policy, you will need a certified copy of the person’s death certificate.
“A death certificate is the standard form of documentation required when filing a state life insurance claim,” Cornman says.
The funeral director can help you obtain certified copies of the death certificate. They usually will be sent to you by the vital records department in the state the person lived within a few weeks of the death. Usually there is a fee for each copy.
If your loved one is presumed missing and hasn’t been declared dead, you won’t have a death certificate. Under these special circumstances, you may need an acceptable alternative to the death certificate.
“In this case, a court order stating that the insured is dead or presumed dead may suffice,” Cornman says.
5. Request claim forms
The representative of the life insurance company can help you obtain the claim forms you will need. You will need to complete the forms and gather all the information that the insurance company requests.
If you’re too upset to fill out the forms yourself, ask your insurance agent or estate lawyer to help you. You will have to sign the form, however. All the beneficiaries named in the policy will have to fill out claim forms.
If you want your claim to proceed quickly, be sure to follow the directions from the insurance company carefully.
6. Choose how your proceeds will be paid
You may have several payment options available to you. They can include a lump sum, which may be a good option if you need to pay immediate expenses. It may also be possible to have the life insurance company pay you principal and interest in installments.
Another option with some policies is a life income option, which aims to stretch payments over your remaining lifespan. Some policies also have an interest income option where the company holds the proceeds and pays you interest, allowing the death benefit to remain intact. Upon your death, it will go to a second beneficiary of your choice.
In most cases, life insurance proceeds are not taxable. However, if you choose one of the options that pays you interest, the interest may be taxable as income. Check with your financial adviser before choosing your option, as settlement options sometimes cannot be changed.
7. Submit the completed forms
You will need to send back the completed paperwork and include a certified copy of the death certificate. Be sure to return the forms and death certificate via certified mail or with a return receipt requested so you can track it should it not arrive within a reasonable time. That way, you will also know when the forms arrive. Then it’s simply a matter of waiting for your check to come in the mail.
“In most states, prompt pay laws require insurers to respond within a certain number of days,” Cornman says. “However, the number of days can vary from state to state.”
It can take a few days to a few weeks to see your check. But if you have done everything correctly, the benefit should be in your hands reasonably soon.
With rising wedding costs and planning timelines of a year (or more) before the big day, the risk of unexpected or last-minute nuptial mishaps is increasingly present and ever more costly. The wedding dress, the centerpiece of many a bridal fantasy, is no exception. Protecting that investment – an average of $1,357 is now spent on the gown – from the “say yes to the dress” moment to the walk down the aisle can provide welcome peace of mind for emotionally and financially invested couples and their families.
Check Your Existing Coverage
Before purchasing any wedding-specific coverage for your nuptial attire, check your homeowners or renter’s insurance policy. Items such as wedding wear, along with gifts and liability, may fall under your existing policy. Speak with your insurance agent about coverage specifics and review the language of your policy to become familiar with any special rules or procedures you need to follow to qualify for a claim. You don’t want to lose your opportunity for coverage due to a failure to follow terms.
If you used a credit card to purchase your wedding dress, tuxedo or other attire, you will have the added protection of the federal Fair Credit Billing Act, which affords you the right to dispute billing errors and fight back against vendors, potentially recovering losses should something go wrong.
While helpful in providing an additional safeguard, relying on your credit card alone for the protection of your wedding attire, particularly when purchasing or making deposits far in advance, is not necessarily fail-safe.
Insuring Your Dress – And More
You can insure your gown under a broader wedding-insurance policy that covers photos, gifts, rings, deposits and other nuptial essentials, as well as a variety of potential wedding-related incidents, such as a vendor going out of business or delays due to sickness or injury of an essential member of the festivities. In short, wedding insurance is a tool to protect a couple’s investment in their big day from circumstances beyond their control. Disasters involving the gown are no exception.
This type of insurance is available through the Wedding Protector Plan from Travelers Insurance, the WedSure Plan from the Fireman’s Fund and WedSafe Wedding Insurance offered through Affinity Insurance Services Inc.
Wedding-dress coverage varies, depending on the provider and policy, but typically, wedding insurance covers loss, theft or damage to the bridal gown as well as to other attire specific to the big day.
Circumstances beyond the control of the couple are reimbursable – for example, if the shop fails to deliver the dress, the seamstress ruins the alterations or the tux is torn or lost on the plane.
However, most plans do not cover “changes of heart,” i.e. wedding cancelation costs due to the bride and/or groom deciding not to get married. The one exception is WedSure, which only covers party funders who are not the bride and groom – and only if the cancelation is made more than 365 days before the first covered event.
Buying Wedding Insurance
You can purchase wedding insurance at just about any point in the wedding-planning process. The Travelers Wedding Protector Plan, for example, covers deposits made prior to purchasing the insurance as long as receipts are available and no impending or existing claims are present when you buy the insurance.
When estimating the coverage you need for your attire, consider the cost of your gown, veil and all other bridal-party wear. Typically, there is a specified maximum amount that can be claimed under each coverage section of a wedding plan – in this case, attire – and it ranges depending on the provider and policy.
A deductible may or may not apply; the Wedding Protector Plan, for example, doesn’t have deductibles. If you have a claim, covered losses are paid from the first dollar up to the applicable limit. Just be sure you understand the details of the specific insurance plan you intend to purchase and keep records of receipts and any other relevant paperwork in the event that you need to file a claim.
Basic policies for weddings usually cost between $150 and $550. Considering the cost of the average wedding today – over $30,000 – the price of protection is not a high one to pay.
When you sign up for a new health insurance policy, it doesn’t get implemented with immediate effect. The policy comes into effect after a ‘waiting period’, which depends on the the kind of insurance and other factors, such as age, your medical history and the company. In other words, the insurer is liable to entertain any claim amount filed only after this waiting period.
If an individual undergoes an accident or undergoes hospitalisation during the waiting period, the customer may not be covered for a loss. As mentioned before, the concept of waiting period exists across different kinds of insurance policies, and the quantum of waiting period may differ depending upon the insurer and the nature of the insurance policy.
However, following are the broad indicators of waiting period. There is an initial waiting period of 30 days, which goes up to 90 days in some cases, from the effective date of the policy. Some insurance policies may permit treatment for accidental external injuries with a minimum of 24-hour hospitalisation.
Pre-existing diseases may not be covered in the first 2-4 years of the policy depending on your age and the nature of the policy. A pre-existing disease refers to any medical condition of an individual prior to the commencement of the policy. Now the policy may be effective for any other ailments in the first few years of the policy. Buy any claim filed for illness related to the pre-existing disease will not be covered in the first 1-4 years of the policy as stated in the policy document.
This feature is most common in insurance policies designed for senior citizens. Also, the insurer may insist that you stick with the same insurer if you want the cover to continue without further waiting periods in future.
The third is the ailment-specific waiting period, during which an ailment will not be covered. This again varies from company to company. But some common ailments that involve waiting periods include, ENT disorders, polycystic ovarian diseases, diabetes, osteosrthiritis, osteoporosis, hypertension and hernia. These ailments are usually covered only after two years from the date of commencement of the policy.
According to the Insurance Institute for Highway Safety, teen drivers are risky drivers. It could be reckless behavior or it could be inexperience, but the fatal crash rate per mile for 16-19-year-olds is three times that of drivers age 20 and older. That means insurance companies are automatically going to see your teen as a claims risk and raise your rates. If your child starts racking up tickets or gets in a fender bender or two, watch your rates head to the stratosphere.
You may be able to keep your premiums lower by helping your teen avoid risky behavior behind the wheel, and that means getting them into the best driver’s education program possible. I selected my daughter’s school here in Michigan, in part, because it was able to demonstrate statistically that its graduates ended up in accidents at a rate far below the statewide average for all teen drivers.
2. Embrace Your State’s Graduated driver Licensing Program
All 50 states have enacted graduated driver licensing programs that gradually ease teens into independent driving. Typically, the programs require 30-50 hours of supervised drive time before a restricted license is issued, until a teen’s 18th birthday. The IIHS says graduated licensing programs are associated with fewer teen fatalities and fewer insurance claims. But the programs can work only if you enforce them at home. Don’t fudge numbers on the drive-time log, and don’t turn a blind eye when your teen blatantly violates the restrictions on their license.
Sure, it can be a pain to spend 50 white-knuckled hours in the car with your teen while they are learning, but hopefully your reward will be lower insurance premiums and a child who makes it to adulthood.
3. Avoid Letting Your Teen Have Their Car …
It can be tempting to buy your teen a vehicle. Then they won’t be constantly borrowing yours and potentially making a mess of it. I advise you resist the temptation for these reasons:
- Having them drive your car would make them a secondary driver rather than a primary one, a designation that could keep your premiums lower.
- Having them share the family vehicle may limit their drive time, which could be a good thing for young drivers who are prone to getting in accidents.
- Buying another car means you’ll be paying insurance on another car. Need I say more?
4. … Or Make Sure Theirs Is Cheap(er) to Insure
But maybe you’re in a situation in which you really need your teen to have a separate vehicle. I can imagine this would be especially true if your household only has one vehicle currently. In that case, be smart about the type of car you get your teen. Some vehicles are safer and, in turn, cheaper to insure. The IIHS has recommendations as to what it considers the best cars for teens.
5. Add Your Teen to Your Policy
Assuming you will be paying the premiums, it is almost always the better deal to add your teen to your policy rather than purchase a separate one. The insurance company takes into account the driving record of each person listed on a policy. Your good driving should partially offset your teen’s potentially risky driving. Plus, your account may come with discounts not available on a teen’s policy.
6. Look for Teen Driver Discounts
When you add your teen, ask the insurance company about discounts for new drivers. Students with good grades may be eligible for discounts; those who take an approved safety course may also be eligible. If your teen goes away for school and doesn’t take the car, you may be able to get a discount for that, too.
7. Let the Insurance Company Spy on Your Teen
Usage-based insurance is one of the latest fads in the world of automobile insurance. Auto insurance companies send you a device that you plug into a port under your dashboard. It records how fast you drive, how fast you accelerate and how fast you brake, among other things. Then, if the auto insurance gods say you’ve been a good driver, you’re rewarded with a discount on your premium.
These discounts are available to all drivers, but parents might find they are useful for monitoring their teens. Some companies issue reports grading driving skills, and some teens might be inclined to lay off their lead foot if they know someone, somewhere is watching. If you like the idea of monitoring your teen but aren’t thrilled with the idea of letting an insurer inside your dashboard, you could alsotry spying yourself.
8. Consider a Higher Deductible or Lower Coverage
One surefire way to reduce your premiums is to raise your deductible. Just make sure you have enough in the bank to cover it if needed. Similarly, you could see how much it saves to drop collision or comprehensive coverage. However, do the math before making any rash decisions. Unless you can afford a new car, dropping comprehensive coverage could mean you’ll be without a set of wheels if your vehicle gets totaled.
9. Shop Around for Better Rates
I was shocked to find out the insurance company, to which I had been so faithful for 17 years, was charging me double what other insurers were quoting. Perhaps it’s different for other companies, but my experience was that loyalty doesn’t necessarily pay off in terms of cheaper premiums.
Before you blindly add your teen to your existing policy, shop around for better rates. Underwriting policies vary by company, and some may have better pricing for young drivers. In addition, teen discount programs can differ between insurers.
10. Consolidate Your Coverage With One Insurer
Finally, when you find the right car insurance company, consider moving all your policies to that provider. Virtually all insurance companies offer multipolicy discounts, and the more you insure, the greater your discount may be.
You could almost insure every step you take in life — but you shouldn’t.
You could spend every available dollar you have on insuring against something bad happening. What’s the likelihood of something going wrong? What are the exemptions in the policy? And if you make a claim, will the payout be worth the cost?
That said, insurance can protect you, and having it can put your mind at ease. Life insurance, for example, is important to have if your family relies on your income. There are some exceptions to life insurance, but all depend on your situation and comfort level.
Putting life insurance aside, here are seven insurance policies you should consider canceling. Put money aside in an emergency fund to cover you in the rare event that something does go wrong in these areas:
Rental car insurance. We’ve all been bombarded at the rental car counter by a salesperson trying to get us to buy extra insurance as we rush through a rental agreement. Chances are your credit card covers you if you’re paying with one, or your auto insurer for your car you left at home covers rentals. Check with both companies before you leave home.
If you insist on having rental car insurance in case of an accident, one option is Protect Your Bubble. It sells rental car insurance for $8 a day, compared to the $30 or so the rental agency will charge you at the counter. The catch is you have to buy it ahead of time. The checkout counter, as many insurance companies know, isn’t the best place for a consumer to make an educated decision.
Pet insurance. Read the policy’s fine print for exclusions and coverage. Ask yourself if it’s a worthwhile expense, given that your pet may be old and be in more pain after surgery than without.
John K. Barnes, a certified financial planner for Modern Woodmen of America, says it’s a waste of money for his pet, which would cost $50 to $100 a month to insure, depending on the plan. Putting that money in a savings fund, such as $50 in a college 529 plan each month, would exceed $20,000 in 18 years, Barnes says. While your dog won’t thank you for that savings choice, your kid might.
Travel or evacuation insurance. Traveling to a foreign country can be exciting, but it can also bring trepidation before a trip — especially to somewhere covered by a U.S. Department of State travel warning.
Suzanne Garber, a travel executive who has helped thousands of people out of dangerous situations, says she has never bought travel or evacuation insurance. Medical, security or other travel emergencies can be planned for, she says. “Plans can be as elaborate as researching the destination or packing appropriate safety supplies to taking certain medications that prevent disease or discomfort while traveling.” Plus, many health care policies already cover you when traveling. She also recommends using a carryon bag to make changing flights easier if your flight is cancelled.
Auto collision insurance. If you own an old car that’s paid for, you don’t need collision insurance. It covers repairs after a car accident, but it doesn’t such non-collision events as fire, theft and vandalism. Those are covered by comprehensive auto insurance.
Both types of coverage will likely be required by your lender if you still owe money on the car. But once you own the car outright, collision insurance is optional.
If a car is totaled in an accident, insurers only pay the current value of the vehicle. So if you own an old car that isn’t worth much, you won’t get much money. You’re better off putting that collision premium in a fund to help you buy a car when you need one.
Mortgage insurance. This will pay off your home’s mortgage if you die. While that can be a major benefit to your family, you’ll save money by buying a term-life policy instead to pay off the mortgage and other bills through the length of your mortgage.
Water line insurance. This is one I get every year from my water company, reminding me that I’m responsible for the water and sewer lines between my house and the curb. If something breaks, I’ll have to pay for it. I throw each letter in the recycle bin, knowing that repair costs are a few thousand dollars that are more affordable than the insurance coverage being offered.
Credit card insurance. Your credit card company may try to sell you this, playing on your fear of losing your job and being unable to pay your credit card bill. A better idea is to not use your credit cards so much to begin with. Insurance is also sold to cover you if your credit card is stolen. Don’t buy it. Federal law limits your liability to $50 if your card is used by a thief, as long as you report it promptly.
Insurance isn’t meant to cover the little problems of life. It’s meant for the big problems that could devastate you or your family. Don’t let these small issues get in the way.
A former newspaper journalist, Aaron Crowe is a freelance writer who specializes in personal finance, real estate and insurance posts for Wisebread, MortgageLoan.com, AOL and other sites.
Are you a frequent patron of rental car companies? If so, you may be well aware of their shrewd practices that can leave you in the hole if you fail to be a responsible shopper. And what about all of the hidden or surprise fees that come with the territory?
When I made my first rental car reservation, I was stunned at how low the rate was. Unfortunately, I quickly learned that things aren’t always what they appear to be when I picked up my ride for the weekend. The initial figure was just an illusion. Here are seven common rental car gotchas to watch out for:
1. Penalties and Extra Fees
This is usually where the trapping begins. You walk into the rental car company, hand them your reservation, and drive away with exactly what you reserved at the quoted price, correct? Well, not if you are offered a more luxurious ride, need to extend the rental for a day or bring the car back early, plan to use a debit card, or alter the return destination. These are just a few of the scenarios in which your wallet can take a hit. To avoid these fees:
- Decline the upgrade unless it is being offered as a courtesy to you.
- Do not extend the rental car reservation unless it is an emergency. And if you must, be aware that the rate for the extra day will more than likely increase.
- Avoid returning the rental car to a location that differs from where you retrieved it. Doing so may result in the assessment of a penalty.
- Search for a rental car company that accepts cash or does not require a deposit for debit card transactions. If your attempts are unsuccessful, brace yourself for a $200 to $500 hold on your account and endless amounts of paperwork.
- Refrain from smoking inside the vehicle. If you fail to heed my warning, you will pay a cleaning fee.
2. Airport Rentals
Convenience definitely comes at a premium rate when you rent a vehicle from an airport location. Some airport locations have extended hours, making it easier to hop off a plane and go about your merry way without having to worry about unloading a wad of cash to pay for a taxi. However, the cost of these added perks is passed along to the consumer in the form of higher rates.
If at all possible, catch a taxi or take public transportation to an alternative location to avoid airport surcharges. It may require a bit of planning ahead, but it could prove worthwhile. And if you must rent at the airport, make your reservation online beforehand to secure the best rate.
The friendly sales representative at the counter may encourage you not to worry about gas because the rental agency can always fill the car up for you if you’re short on time. But you may want to think again, because the agency’s rate per gallon is typically a lot more expensive than you’ll pay at a gas station. Also, say “no thanks” to the toll pass, GPS system, satellite radio, roadside protection, car seat or any other service that they offer to make your trip more “comfortable.” If you don’t say no, you will pay.
According to the Insurance Information Institute, most rental car companies offer the following coverage options:
- Loss-damage waiver ($9 to $19 per day).
- Liability coverage ($7 to $14 per day).
- Personal accident coverage ($3 per day).
- Personal effects coverage ($1 to $2 per day).
But it’s possible you don’t need any of these options. Before you rent a car, call your car insurance company and your credit card company to see what kinds of coverage they already provide for rental cars, and under which circumstances it applies.
5. Mileage Limitations
Looking to save a few bucks on your rental car reservation? A limited mileage arrangement may do the trick, but could also be disastrous if you fail to plan properly. You will be charged a flat fee only if you don’t exceed a specified number of miles in a single day or for the duration of your rental. But if your plans change, brace yourself for the additional fees. Also, inquire about territorial restrictions, as your contract may allow only in-state travel.
Even if you are in a hurry, do not leave the premises until the sales representative has performed a thorough interior and exterior inspection of the vehicle. Failure to do so can result in that scratch on the bumper or coffee stain in the rear passenger seat becoming your problem. Cover yourself by taking photos during the inspection.
7. Underage Drivers
Are you under the age of 25? Don’t get too thrilled about the prices you see online, because you may be paying almost double that amount. Before I reached the “golden age” in the rental car world, I attempted to rent a car to travel to an out-of-town event so I could preserve my car’s mileage. The amount on the contract was equivalent to a car payment on a used vehicle.
That car that’s supposed to provide you with the freedom to get you where you want to go may also be one of the many chains tying you down to a job you’d rather ditch. That’s because — over the course of a lifetime — the average person will spend more than three years at work just to pay for their various sets of wheels.
The folks at eBay Deals recently released a “Trading Time” calculator that lets you figure out how long you have to work to pay for various expenses. It’s an eye-opener.
Over a 50-year working lifetime, the typical person will work 157 weeks to generate the cash needed to pay for his or her cars. Then, add in another 50 weeks of work to cover car insurance. Those figures are based on the weekly median gross income. Yours may be higher or lower, of course.
If that doesn’t seem like a lot to you, then think about this: You work even longer to pay for your vehicles because you need to figure in taxes and the interest on your car loans. And don’t forget all the time in that vehicle commuting or shuttling your kids around.
According to the Trading Time calculator, other major expenses that keep you chained to your desk may include shoes (17 weeks), phone bills (60 weeks) and even toilet paper (two weeks).
Whether you love your job, hate it or or fall somewhere in between, it’s helpful to think about the things you spend money on in terms of the amount of time you have to spend working to pay for them. Only you can decide what’s really worth it.
Can You Get Back Some of Your Time?
Of course you may have no choice but to drive, and in that case, you may want to look for ways to try to reduce your costs. For example, can you drive a slightly used car instead of a new one? Keep your vehicle longer? Settle for a more economical model?
Another way to cut costs is to improve your credit. With a better credit score, you will qualify for a lower interest rate, which can mean significant savings over the life of the loan. You can see your credit scores for free at Credit.com to determine whether your credit is good. Ideally, you want to review it at least a month before you plan to shop for a vehicle in order to address any issues you uncover. (Give yourself more lead time if your credit isn’t great. Here’s a guide to help yourebuild your credit. )
Here’s an example of the savings you may achieve by boosting your credit. As of June 4, the lowest quoted rate for a $20,000 50-month auto loan with excellent credit on Credit.com is 1.99 percent. That translates into a monthly payment of $411. But for someone with poor credit, the rate jumps to 14.99 percent or a monthly payment of $540.
From the old fiction about red cars costing more to insure, to the one about rates dropping when you turn 25, to the idea that “full coverage” means you get a new car after a crash, myths about car insurance abound. And they’re easy enough to take at face value — until you look at the facts. Not falling for these eight insurance fables could save you some cash.
1. “Full coverage” will get me a new car if I crash. Your auto repair shop may thank you for having collision and comprehensive coverage, because they’ll get paid by your insurer for fixing your car. But however you define “full” coverage, it won’t equate to you getting a new car after you crash. Insurance is meant to put you back to where you were, not improve upon it, so you won’t be getting a better car than you had.
If your car insurance agent tells you that you have “full coverage,” ask what that entails. It could include liability, property damage and rental reimbursement, says Shane Fischer, an attorney in Winter Park, Fla. “Unfortunately, most people who claim to have ‘full coverage’ are people of modest incomes who buy the cheapest policy their state legally allows,” he says. “This can leave them without uninsured motorist coverage if they’re a victim of a hit and run, without a rental car if theirs is damaged in a crash or personally responsible for thousands in medical bills if they don’t have enough liability coverage.”
Full coverage isn’t an insurance term agents use, says Adam Lyons, CEO of The Zebra, a digital auto insurance agency. Collision insurance covers damage to your vehicle in an accident. Comprehensive covers non-accident damage, such as from theft and fire. If you want medical coverage and other protections, you’ll have to spell that out for your agent, Lyons says.
2. My rates will go up if I get a traffic ticket. Not always, says Matthew Neely, owner of Eco Insurance Group in Las Vegas. A client who has six speeding tickets in the past three years hasn’t had his rate go up, he notes.
Here’s how it works, Neely says: Some companies only ask for a record of an applicant’s driving history when he or she first sign up for a policy. Motor Vehicle Reports cost $3 to $28, depending on the state. “These charges can get very expensive for insurance companies, so a lot of the time the carrier will randomly select households and run the MVRs,” he says. “If you are lucky enough, the insurance company will not find out about your speeding habit. However, if you let your insurance lapse, get into an accident or change insurance carriers, the carrier will run the MVR.”
3. Thieves prefer new or fancy cars. Not true, points out Lyons. Of the 10 most frequently stolen cars, the most stolen in 2012 was the 1996 Honda Accord, according to the National Insurance Crime Bureau. You might have the latest and fanciest car, but a 1996 Accord is preferable for catalytic converters and other parts that are more in demand. To protect your car against theft, get comprehensive insurance.
4. My red car will cost more to insure. False. Insurers don’t care what color your car is and they don’t ask for that information. Police might spot a speeding red car quicker than a white one, but an insurer factors in other aspects of your car, such as model, make, year and engine size.
5. The longer you are with an insurance company, the lower your rate will be. This is half true, Neely says. Longevity discounts are sometimes offered to policyholders, but it doesn’t shelter them from increased costs, he says. “Most of the time, the moment you make a claim, this discount will disappear, and it does not guarantee your rate will not increase,” Neely says.
6. My credit score has nothing to do with my car insurance rate. In most cases it’s the biggest factor of determine your rate, right after your driving record, Neely says. Studies have shown that individuals with good credit get in fewer accidents, he says, though insurers in California, Hawaii and Massachusetts can’s use credit as a rating factor.
7. No fault means I am not at fault. In most states “no fault” simply means that each insurance company involved pays for their respective policyholders injury-related bills, regardless of who is at fault, Neely says. This helps keep the overall cost of car insurance down.
8. Rates drop at age 25. Rating factors vary by state, but in North Carolina, the myth is wrong because age isn’t a factor in pricing, says Jonathan Peele, president of Coastline Insurance Associates of North Carolina. Instead, insurers use the years of experience to determine the rate. Once the driver has more than three years of driving experience, the insurer can’t surcharge the premium, he says. Less experienced drivers are charged more for car insurance because they have a higher risk.
Life is full of all kinds of uncertainties. That is why it’s important to always be prepared. When booking a vacation, most people will put in a lot of time planning where they are going to stay or how they will get to their destination. The last thing they want is for something to go wrong and have their trip delayed or, even worse, canceled. Unfortunately, it happens to travelers all of the time for a variety of reasons.
If the cause of delay is something that is out of the airline’s control, the airline is not at fault and, ultimately, not obligated to provide any assistance to travelers. So what happens if your flight is delayed due to a snowstorm and you have a hotel reservation that is non-refundable? Most might think that they’re out of luck. However, If you paid for your trip with a credit card, that isn’t necessarily the case. Depending on the card you used to book your trip, you might be covered with travel protection benefits.
Trip Delay or Interruption/Cancelation Coverage
If you find yourself facing a travel delay, you may be covered up to $500 for food and any lodging that is non-refundable. The amount of time before your trip insurance kicks in depends on the card.
Trip cancelation insurance is ideal for anyone who needs to cancel a trip because they fall sick or become injured. Trip interruption insurance is ideal for severe weather that shuts down flights for 24 hours or more. Depending on the credit card that you use, this benefit could be worth as much as $10,000 for each covered trip.
Let’s take a look at some of the best cards featuring trip delay and interruption/cancelation insurance. (For more, see: Credit Cards With Travel Insurance.)
Chase Sapphire Preferred
Chase Sapphire Preferred, issued by Chase Bank USA, a subsidiary of JPMorgan Chase and Co. (JPM), offers cardholders the following benefits:
Trip Delayed Insurance: Up to $500 if delayed 12 hours or more
Trip Interruption/Cancelation Insurance: Coverage up to $5,000 per person or up to $10,000 per trip
In addition to this benefit, the Chase Sapphire Preferred card is also one of the best rewards credit cards, offering 40,000 Chase Ultimate Reward points after the cardholder spends $5,000 in the first three months.
Citi Executive AAdvantage Card
Citi Executive AAdvantage issued by Citibank, a subsidiary of Citigroup Inc. (C), has the following benefits:
Trip Delayed Insurance: Up to $500 if delayed three hours or more
Trip Interruption/Cancelation Insurance: Coverage up to $5,000 per person
If you fly American Airlines (AAL) or any of their OneWorld Alliance partners, then the Citi Executive AAdvantage card is a great choice. The standard sign-up bonus is 50,000 miles after the initial spend, however right now Citi is offering 75,000 AAdvantage miles after the cardholder spends $7,500 in the first three months.
Chase Ink Plus Business Card
Most of the credit cards that include trip insurance are personal cards. There are a few select business cards that have the travel insurance benefits, including the Chase Ink Plus business card. Chase offers its cardholders the following benefit amounts:
Trip Delayed Insurance: Up to $500 if delayed 12 hours or more.
Trip Interruption/Cancelation Insurance: Coverage up to $5,000 for each eligible trip.
The Chase Ink Plus card is one of the most popular business cards because it offers five times the points on Internet, cable, cell phone and at office supply stores. Cardholders also receive 50,000 Ultimate Reward points after they spend $5,000 in the first three months. (See also, Surprising Credit Card Benefits.)
United MileagePlus Explorer Card
The last card on the list offering coverage for qualified trips that are delayed, interrupted or canceled is the United MileagePlus Explorer card. It provides the following benefits to its cardholders:
Trip Delayed Insurance: Up to $500 if delayed 12 hours or more
Trip Interruption/Cancelation Insurance: Coverage up to $10,000 for each eligible trip
It’s no great secret that across the nation, insurance premiums are on the rise. Over the past five years, the cost of insuring a home against fire and other casualty has crept up about 10 percent a year — every year. Health insurance increases, while they’ve been muted of late, still rose 4 percent this year.
But if you think those hikes are steep, get a load of this next one.
Congratulations! You’re a Father! (Now Open Your Wallet)
Kids are expensive. If you’re a parent, you know this already. If you’re a parent of a kid who hasn’t turned 16 just yet, you’re on track to get another lesson in how expensive they can be. Because once your offspring passes the driver’s test and receive a license to drive from the state, he’s going to need to be insured — and that will cost you an extra $2,000 a year, on average.
(By the way, if your kid is getting her driver’s license, your wallet won’t take quite as big a hit, girls being 25 percent less expensive to insure than boys on average. But it’ll still be some serious coin.)
According to the National Highway Traffic Safety Administration, driving is a risky activity for teens. The are more prone to get into accidents — about four times as likely as older, more experienced drivers, according to the Centers for Disease Control. And traffic accidents are the leading causes of death for Americans ages 16 to 19.
Between lives lost and property destroyed, this all makes insurance companies very wary of insuring teen drivers. And when they do agree to insure a teen, they make you pay through the nose.
According to a recent report posted on Bankrate.com’s (RATE) InsuranceQuotes.com, across both genders, all age categories, and all 50 states, parents pay an average 84 percent more for their car insurance after adding a teen to their policy.
Stay Between the (State) Lines
Think that’s bad? It might get worse.
Unless you’re fortunate enough to live in a state like North Carolina or Hawaii, where legislators have passed laws that ban setting insurance rates based on factors such as age or gender, your rates may rise by more than the average 84 percent.
How much more? Take a look at the top 10 states hiking rates on teenage drivers by 100 percent and higher:
New Hampshire: 100.56 percent
Louisiana: 100.58 percent
Arizona: 103.65 percent
Washington: 104.66 percent
Maine: 105.23 percent
Idaho: 106.74 percent
Alabama: 110.61 percent
Wyoming: 112.11 percent
Utah: 114.62 percent
Arkansas: 116.34 percent
That’s right. Put a teenage driver on your policy in any one of these states, and you can expect to see your insurance cost for the whole family more than double.
The news is even worse for parents in Louisiana. Although its teen drivers bring “only” the ninth highest rate hikes with them when they join a policy, Louisiana car insurance in general is already the most expensive in the land — averaging $2,699 annually for a single male driver, according to Insure.com. Add a kid to that policy, and you’ll be shelling out upwards of $5,400 a year.
What’s to Be Done?
Is there any way to beat the system, and avoid these hikes? Not entirely, no.
Sure, you could move to Hawaii, where insurance rates rise least. Then again, Hawaii also has the honor of hosting the nation’s most expensive housing market — so you’ll end up seriously out of pocket, one way or the other. On the other hand, North Carolinian insurance rates don’t rise so much when you put a teen on your policy. That market might be worth a look, if you’re willing to move to save money.
Patience Is a Virtue… That Pays
One solution suggests itself from InsuranceQuotes.com’s offhand observation that certain teens cost more to insure than others.
In particular, if you put a kid on your policy as soon as he hits 16, well, new 16-year-old drivers tend to double an insurance bill no matter where they live, averaging 99 percent rate hikes.
But premiums tend to rise less when teens wait a bit before trying to drive. 17-year-olds joining their parents’ policies average a 90 percent increase. 18-year-olds cost 82 percent more. By the time Junior is age 19 and ready for college, the rate hike is “only” 65 percent.
Meanwhile, the standard caveats still apply: No one’s forcing you to accept “average” rate hikes, so now that you know the “average” scenario, shop around to see if someone will offer you a better deal. Ask if taking (and passing) a safe driver course might reduce your teen’s rate. And of course, since we’re talking student-age kids here, make sure to inquire about discounts for good students. Whether or not it makes sense, insurance companies — like grandparents — often favor kids who bring home A’s.
Many people have the mistaken impression that umbrella insurance is only for the wealthy, but that’s not true. Personal finance specialist and CPA Mitch Freedman says, “As long as you can earn a livelihood, you should have an umbrella liability policy.” That’s because if you do lose a lawsuit, you can be held personally liable based not only on your current assets, but also on all future earnings. Wages can be garnished as part of a legal settlement.
An umbrella policy protects you from that risk. It adds liability protection over and above your homeowners and car insurance up to a limit you choose. Most policies cover you up to $1 million to $2 million, but the very wealthy may choose higher amounts. Umbrella policies do require that you maintain liability limits on your homeowners or car insurance policy. Usually insurers require you to carry $300,000 to $500,000 liability coverage on your car and house.
Why Get It?
So what are the three key reasons you may want to get an umbrella policy?
1. To protect yourself if someone is injured on your property and sues you. The liability insurance will not only cover the cost of any medical bills, it will also pay for your legal defense if the costs add up to more than the liability coverage on your homeowners policy.
2. To protect yourself if you are involved in a car accident and are sued. After your insurance is maxed out, the umbrella policy covers the rest up to the policy limits.
3. To protect yourself from slander or libel or other types of lawsuits not covered by your home or auto policy. For example, in today’s world, what you post on social media could leave you open to a lawsuit. Million-dollar lawsuits have been filed against posters on Facebook and other social media. The umbrella policy would cover any legal costs and any settlement. Even if you win the suit, out-of-pocket legal costs can mount quickly. (See Can You Be Sued If You Give A Bad Review On Yelp?)
Any one of these reasons can add up to a million dollars or more in claims. You may not have that much on hand, but if you lose the lawsuit, the judge can award all your assets and any future earnings until the claim is paid. (See It’s Raining Lawsuits: Do You Need An Umbrella Policy?)
What’s the Cost?
Umbrella policies do vary by risk. If you have a house and two cars, you can expect a premium of about $200 for $1 million and you can add on a second million for about $100. Do you really need $2 million? As Jack Hungelmann, author of “Insurance for Dummies” wrote, “You can’t control whom you might injure.” You could injure a CEO or professional ballplayer and owe millions for lost earnings.
If you think you can’t afford the premium, consider increasing the deductible on your homeowners and car insurance policies to $1,000, which likely will save you enough to cover the premium cost of umbrella insurance. That does mean you will have a higher out-of-pocket expense for a minor accident, but most agents recommend against filing small claims because it can hurt your claims-free discount or even result in a loss of a policy for filing a claim.
How Much Do You Need?
Freedman, who heads Mitchell Freedman Accountancy, in Westlake Village, Calif., recommends that everyone should have at least a $1 million umbrella policy. If you earn more than $100,000 per year or have more than $1 million in assets, then you should get more. Other CPAs recommend that their clients carry an umbrella policy with limits at least up to their net worth and advise people with rental properties to have a policy for $3 million to $5 million.
Google (GOOG) has rolled out an auto insurance comparison service in the U.K. called Google Compare. This service compares rates from over 125 different providers, allowing consumers to choose the policy that fits them best, while saving money at the same time. It appears Google is preparing to enter the U.S. car insurance market by introducing a price comparison tool, according to an analysis by Ellen Carney from Forrester.
It appears Google will roll out their comparison service in California in the first quarter of 2015, before expanding to other states that may include Illinois, Pennsylvania and Texas. If Google is successful in these test markets, they could quickly expand to sell insurance in more markets in the United States as they have already obtained licenses to do business in more than half of the 50 states.
At the same time, speculation has also been growing that Google may take over CoverHound, which already provides the comparison service Google hopes to grow. If this proves to be true, Google could be in the business of auto insurance comparison faster than the current estimated plans. This should be welcome news for most consumers looking to save money on auto insurance.
However, the U.S. version of Google Compare could face headwinds if insurers do not work with Google. Only a small handful of insurers have granted Google authorization to sell insurance policies on their behalf at this time. If the big insurers do not jump on board, the comparison tool may not be seen as robust enough for consumers to make a valid comparison.
Consumers in the U.S. could potentially save hundreds of dollars a year by using Google Compare. Imagine comparing hundreds of car insurance companies by filling out just a few simple questions rather than calling dozens of companies or filling out hundreds of different quote forms.
You may even find quotes from companies you were never aware of prior to the service rolling out. The best rates would be easy to find and the amount of time to find them would be negligible. Of course, a service like Google Compare has its problems, too.
The Downside of Using Google Compare
Google Compare in the U.S. could provide hundreds of quotes, but would consumers make the best choices using this service? Some users will end up choosing the cheapest policy possible without considering the consequences. Cheaper insurers may cut costs when it comes to their claims process or they may not have strong financial ratings. While you could save hundreds of dollars using this service, you may also end up with an auto insurer that you regret choosing.
It should be noted that Google will not be providing this service out of the kindness of their hearts. Instead, Google will likely earn a commission on each policy they sell depending on their arrangement with each individual insurer. This could lead Google to show the results based on how much money they would make off each sale rather than based on which policy is truly best for the consumer.
Finally, relying on Google to provide yet another service in our lives could make some consumers weary. Voluntarily giving Google even more information about us will allow them to target advertising even more precisely, in addition to any commissions Google may earn for selling insurance on the behalf of other companies.
While Google’s entrance to the U.S. auto insurance market has not yet happened, it could be right around the corner. Once the service rolls out nationwide, the auto insurance shopping process could be greatly simplified, while saving consumers a great deal of money at the same time.
Luxury sedans generally aren’t cheap to buy, but buyers of some models may be pleasantly surprised when they get their first insurance bill.
According to a new Insure.com analysis, some well-appointed sedans come with insurance costs up to 20 percent below the average annual premium for all 2015 vehicles ($1,555).
Why do these cars cost less to insure than other, more modestly equipped vehicles? In part it’s becausecar insurance rates are tied closely to your model’s history of insurance claims — a helpful thing when careful drivers favor your type of vehicle.
“These are expensive sedans that are probably bought by older, more mature drivers, and I think that (reduces) their insurance rates,” says Scott Oldham, editor-in-chief of car-buying site Edmunds.com. “You’re not going to see a lot of teenagers driving these models around.”
Robert Hartwig, president of the Insurance Information Institute, says luxury models can have surprisingly low premiums for several reasons, including:
- They not only typically attract older buyers with better driving records, but generally appeal to well-heeled consumers who live in safe neighborhoods and garage their cars — two factors that reduce thefts.
- Luxury sedans usually score well on crash tests, which means they tend to cause fewer injuries and less damage in accidents. Several of the models below enjoy top crash-test ratings from the Insurance Institute for Highway Safety (IIHS).
- Many luxury models have state-of-the-art safety systems that help prevent accidents in the first place.
“All of these factors can contribute to below-average insurance costs,” Hartwig says.
Read on to see five 2015 luxury sedans that come with better-than-average annual premiums, according to the Insure.com analysis. All of them are cheaper to insure than, for example, the humble Mitsubishi Lancer SE.
(Unless otherwise noted, all premiums, amenities and manufacturer’s suggested retail prices refer to each model’s base trim line. The insurance premiums are a national average; your state may be more expensive or less.)
No. 5 cheapest luxury sedan to insure: Lincoln MKZ
Average annual premium: $1,548
The IIHS rates the $35,190 MKZ as a Top Safety Pick, meaning it’ll likely perform well in a crash — which is partly why the model enjoys low insurance costs.
Beyond modest premiums, Oldham says the Lincoln scores high marks for active-suspension and noise-canceling systems that team up to produce smooth, quiet performance. “The MKZ rides very well and is quite refined,” he says.
Base models also come with a long list of upscale features, from heated seats to an 11-speaker stereo. Under the hood, the MKZ sports a 240-horsepower four-cylinder turbocharged engine.
No. 4 cheapest luxury sedan to insure: Toyota Avalon Limited
Average premium: $1,510
The Avalon not only rates as an IIHS Top Safety Pick, it’s also the only low-premium luxury 2015 sedan to garner an “A” grade from Edmunds editors. Additionally, it’s one of just two luxury four-doors with ultra-low premiums to make Edmunds’ Top Recommended Sedans list.
“The Avalon is one of the best full-sized sedans on the market,” Oldham says. “We think it has a very good combination of style, comfort, a large trunk, a lot of engine power and good fuel economy.”
Base models start at $32,285, while the top-of-the-line Avalon Limited lists for $39,980. Both offer lower-than-average insurance premiums — $1,460 for the entry-level Avalon and $1,510 for the Limited version.
The Avalon Limited comes standard with a back-up camera, a JBL premium stereo and other upscale amenities. Mechanically, it features a 268-horsepower V-6 engine.
No. 3 cheapest luxury sedan to insure: Acura TLX
Average premium: $1,486
The $31,445 TLX is another low-premium luxury four-door that makes Edmunds’ Top Recommended Sedans list.
An all-new model, the TLX also gets an IIHS Top Safety Picks Plus rating, which means the car not only has excellent crash-test results, but gets extra credit for its optional collision-warning and automatic-braking systems.
Entry-level TLXs have a wide variety of upscale amenities, from a sunroof to a seven-speaker sound system. Base models offer a 206-horsepower four-cylinder engine — that’s what the premium above is based on — but the 290-horsepower V-6 option bumps the average annual premium to $1,530, which is still better than average.
“The TLX is a luxurious vehicle that comes packed with technology and lots of features for the money,” Oldham says.
No. 2 luxury sedan to insure: Buick LaCrosse Premium II
Average premium: $1,391
Buick’s flagship sedan combines style and comfort with low premiums and a relatively affordable price — $31,065 for the entry-level LaCrosse 1SV and $39,970 for a top-of-the-line Premium II.
“We think the LaCrosse is a very well-rounded large sedan,” Oldham says. “It pampers its occupants, it drives well and its V-6 engine (standard on most trim lines) has plenty of power.”
The LaCrosse Premium II also has lots of luxuries, from 4G LTE WiFi connectivity to an 11-speaker Bose audio system. Its V-6 power plant puts out a very respectable 304 horsepower.
No. 1 cheapest luxury sedan to insure: Infiniti Q40
Average premium: $1,244
Another new model for 2015, the Q40 mixes a relatively modest $33,950 starting price with tiny insurance premiums.
That’s partly because the Q40 is basically a 2013 Infiniti G37, back after a one-year hiatus. Oldham says Nissan — the owner of Infiniti — replaced the G37 in 2014 with the Q50 sedan, but decided to revive the less-expensive G37 this year under a different name.
“The Q40 represents a high value for shoppers,” the Edmunds expert says. “But it’s also an older design, so it’s not as compelling as some of its up-to-date competition.”
All Q40s come with leather upholstery, a six-speaker audio system and other luxury accoutrements. The model also features a 328-horsepower V-6 engine.
No surprises please
As the varied list of cars above suggests, it’s not necessarily easy to look at a group of similar autos and find the cheapest ones to insure.
“You can’t typically see the factors that help a car attract low insurance rates,” says Robert Beaupre, managing editor for Insure.com. “The real indicators are often buried in insurers’ actuarial tables, so the only way to know what kind of insurance costs you’re facing is to do your homework by getting quotes before you hit the dealer.”
To see average insurance rates for the 1,500 2015 vehicles in Insure.com’s database — including rates specific to each U.S. state — visit its insurance rates by model tool. The page also contains details on how Insure.com collected the average rates listed above.
All the vehicle prices above refer to July 2015 manufacturer’s suggested retail pricing for a given model’s indicated trim line, excluding options, rebates and destination fees. Rankings omitted some similar trim lines of the given model, and not all photos shown are of the exact trim level mentioned.
Clearly life insurers have the right idea. Go where the money is or in the case of Millennials where it will be in the future. In fact Northwestern Mutual Life Insurance Company purchased robo-advisor LearnVest during the first quarter of 2015. Northwestern Mutual is not alone in its efforts to tap and understand Millennials. Both Mass Mutual and Pacific Life are involved in efforts to court Millennials largely through education. (For more, see: How LearnVest Works.)
This seems an odd combination at best, much like an old commercial showing a couple holding hands with one wearing an Ohio State jersey and the other wearing one from Michigan. Millennials are a savvy, educated group of consumers which also carries over to their consumption of financial products and advice. Life insurance should be a priority for those in this age group who have a need for the protection. Certainly for those who are married, have kids or others whose financial well-being would be in peril if they died. Life insurance is a key element in a financial plan. (For more, see: Advising FAs: Explaining Life Insurance to a Client.)
Beyond life insurance there is likely a desire to sell a wide range of financial products to this huge group of emerging investors. It remains to be seen how Millennials will react when they begin to delve into some of the investment and annuity products offered by these insurers.
How will the insurers justify their often high cost mutual funds against low cost alternatives from the likes of Vanguard? What type of educational material can they present that justifies these higher cost products? How will they convince these inquisitive, tech savvy young consumers that purchasing high cost annuities and life insurance products with an investment component (and generally high fees and surrender charges) is a good idea? (For more, see: A Financial Advisor’s Guide to Millennial Clients.)
Back in my day many new college grads went into life insurance sales and were told to call all of their friends and relatives and sell them a policy. I suspect that this approach is not is good one with the Millennials. To their credit it appears that these insurers and others are not taking this path. (For more, see: How to Help With Millennials’ Money Habits.)
LearnVest and Northwestern Mutual
LearnVest’s education-oriented approach and fee structure are a good fit for Millennials and others. In a very smart move Northwestern Mutual will allow LearnVest to continue operating as a separate company, presumably with no responsibility to sell any financial products. This will allow Northwestern Mutual to use LearnVest to build its knowledge base on Millennials, their financial needs and how to best attract them as clients. Northwestern Mutual has a dedicated director of Millennial marketing who was quoted in a recent CNBC piece as saying: “More than half of our new clients are under age 34.” (For more, see: The Generation Y Investment Portfolio.)
According to recent research by Gallup, Inc. Millennials are more than twice as likely as all other generations (27% vs. 11%, respectively) to purchase their policies online rather than through an agent. This flies in the face of the traditional insurance company delivery method not only for life insurance but for other financial and investment products as well. (For more, see: Retirement: Which Generations are the Best Savers?)
The same Gallup research also indicated that Millennials will often follow the lead of older family members in terms of the insurance companies they choose. Gallup indicates that building strong ties with Baby Boomers and Gen X-ers is a good tactic for insurance companies looking to tap into the Millennial market. (For more, see: Financial Advisors Need to Seek Out This Group NOW.)
How Will it Work?
Based in large part on my own bias against the sales tactics used and products offered by some insurance companies and their agents and reps I was intentionally harsh earlier in this article. The efforts of Northwestern Mutual, Pacific Life, Mass Mutual and others to understand and educate Millennials is to be commended. (For more, see: How Millennials Use Tech & Social Media to Invest.)
What I am having trouble reconciling is what and how these insurers will serve Millennials and sell to them. I doubt the old sales tactics used by insurance agents will hold up. As I indicated above I’m also leery about how these insurers will justify their high cost products to this group. (For more, see: How Young Investors Can Avoid Financial Pitfalls.)
Perhaps the insurers will move in part to an advisory model where agents are paid for advice rather than only on the sale of products. Clearly life and disability insurance as well as annuities and other insurance related vehicles have their place. Life insurance companies also have a big “nut” to service based on their potential liability for policy benefits. (For more, see: How to Attract Millennial Investors.)
Are life insurers and Millennials really such strange bedfellows? Probably not. Millennials will grow older, marry, have children and other needs for life insurance and related products. Life Insurance companies I suspect will also learn a thing or two from studying Millennials and hopefully this will translate into better, lower cost products as well as perhaps a more consumer friendly delivery system.