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.
Have your auto or homeowner insurance rates been creeping up? If so, you may have been “POed.”
According to the Consumer Federation of America, some insurance companies are secretly “price optimizing” customers — charging them a higher rate for no other reason than they think the customer won’t shop around for a better deal. “Price optimization is a data mining tool used by insurers to charge higher premiums to those consumers least likely to shop for a new policy in the face of a rate increase,” says the federation.
How do they know whether you are likely to shop around? For now at least, that information isn’t public. “I don’t know what’s in the black box,” says Bob Hunter, director of insurance for the federation, which unites nearly 300 nonprofit consumer organizations. But he notes that insurance companies typically can review credit report data, information provided on applications and a host of other data available from third-party sources about current and prospective customers.
As an actuary, Hunter says he first heard of this practice when he participated in an industry webinar touting the benefits to insurers of pricing policies this way. He subsequently reviewed industry information that indicated this is not an isolated practice. When insurers use a price optimization tool, “if you are in a group that shops less, you are going to pay more,” he says.
The federation and other consumer groups are asking regulators to stop insurance companies from using price optimization techniques when setting rates and premiums.
Julia Angwin, whose book “Dragnet Nation: A Quest for Privacy, Security, and Freedom in a World of Relentless Surveillance” revealed many ways companies track consumer information and use it to increase profits, sees this as one example of the way our own information can be used to get us to pay more. “All the ingredients are there for … charging the prices consumers can bear,” she says.
What Does This Mean for You?
If you’ve been POed, how do you fight back? One way is to call the bluff. If your rate goes up, shop around. Better yet, shop every time your policy comes up for renewal, even if you think you have a good rate.
The federation recommends that consumers start by using the rate comparison tool available from their state insurance commissioner to identify the six insurance companies with the lowest rates for the sample profile closest to yours. Then use the NAIC complaint database to narrow down your choices to the four companies with the lowest level of complaints. Once you have your list of four, contact each one for a quote.
That’s what I had to do when my auto insurance rates started to climb, even though I had been with the same insurance company for more than two decades, and my husband and I had good driving records. We switched. A year later, the new insurer raised our rate substantially for no apparent reason. My old insurance company kept sending me letters asking me to come back, and when I responded, they offered me a rate well below the one I was paying before I left.
From the 1st of October 2011, India has opened the doors to Health Insurance Portability. Like the name suggests, this allows switching mediclaim policies from one insurer to another, without losing out on coverage due to exclusion.
Health Insurance Portability Now a Reality
So, if a customer has a policy and wants to switch to another insurer after one year, he/she will be allowed to do so while retaining the benefit of carrying forward the awaiting period served.
This is another milestone in the general insurance industry in India. Health insurance portability which was to become applicable earlier in the year is now a reality! So why are we excited? Well, it gives us another opportunity to make our financial planning better by being with the insurer who we think is the best.
Industry experts say this move will mean insurance companies improving their service levels, as they try to retain clients and entice clients from other insurers.
The initiative to bring in a process and guideline to enable portability is a welcome step by IRDA. The circular released displays great intent on the part of the regulator to free the customer from being stuck with the same insurer, fearing loss of benefits of continuity, thus kick starting a competitive health insurance environment.
Before October 1st, if you needed to move to a new health insurance company, you would have to become a new customer for them and lose all the benefits that your existing health insurance policy might have accumulated.
For example, the rules dictate that you need to stick around for 1 to 3 years with an insurer before pre existing illnesses can be covered. In case of switching to a new insurer, you would have lost this benefit completely. Pre-existing illnesses would get covered after the mandatory period is over with the new insurer. This has changed from October 1st.
Say, you have covered one year with your present insurance company, then you have to wait for only 2 more years with the new insurance company before pre-existing illnesses get covered, thanks to health insurance portability.
While this is a great move forward for investors, make sure you do due diligence before changing your insurer. The premium amount you pay should not be the only reason for you to move.
Keep in mind the following points when initiating a transfer.
Only individual and family floater policies can be transferred over.
Applicable only to health insurance policies that are issued by non-life insurance companies.
The process to move to a new insurer needs to be initiated at least 45 days before the premium renewal date of current policy.
Maximum time within which new insurer can ask for more details from you is 7 days.
Maximum time within which existing insurer provides information to new insurer is 7 days.
Maximum time for new insurer to let you know of its decision is 15 days.
At least 45 days before your current policy’s premium has to be paid, you can initiate a transfer. The new insurance company will take 15 days to either accept or reject your request. If you do not hear from them in these 15 days, they cannot reject your transfer request. In these 15 days, the new insurer can come and ask for more information either from you or from your exiting insurer.
Remember both the sum assured and accumulated bonus can be transferred. But there is a catch when transferring a policy with bonus.
Suppose the sum assured of your policy is 2 lacs and you were paying a premium of say Rs 5,000 for it and you accumulated a bonus of Rs 25,000 in the previous two years as there were no claims that you made. So the sum assured with your current insurer is actually Rs 2.25 lakhs . When you transfer this over to a new health insurer, you might have to pay a premium onr Rs 2.25 lakhs and not Rs 2 lakhs. So your premium will be more than Rs 5,000. In short, while you can carry over the no claim bonus, the new premium will be calculated on the new cover.
Note that there is no guarantee that the transfer will necessarily happen for sure at the same premium and at the same sum assured.
The new insurance company has the right to reject your request. Or accept it with an increased premium. If you have had many claims in the past, it is unlikely that new insurance company will accept you in its fold.
When you transfer you will need to accept different plan from the new company. Not all health insurance policies are same and all of them offer something different, so make sure when you move, you read the policy wordings on your own to understand what you are signing up for. Since the new insurer will do its own underwriting, you could possibly end up with a higher premium as well.
Remember that using health insurance portability just because your premium is steep or because your insurance company rejected your claims is not a wise idea. You need to move if the new policy is suitable for you.
Health insurance portability is bound to make insurers compete with each other for delivery of better services and to retain existing clients. This could possibly lead to other advantages for investors.
In an industry that can frequently seem fairly staid and even unimaginative, an increasing number of automobile insurers are now choosing to invest in developing digital infrastructure. These same insurers are working toward achieving growth through the construction of new business models that rely on digital platforms. Much of that growth can be traced directly to the Internet of Things (IoT).
Auto insurance companies such as Allstate Corp. (ALL), Progressive Corp. (PGR) and State Farm are now using technology to monitor the habits of drivers, such as how frequently they drive, speed changes, and even the time of day that they are driving. The ultimate goal of such investments is for insurers to better assess risk levels and reduce costs. Assuming that the majority of consumers are good drivers, they now have the potential to benefit through lower premium rates. (For more, see: Beginner’s Guide to Auto Insurance.)
Monitoring and Rewarding Good Driving Habits
Currently, one of the most common methods for monitoring the habits of drivers is through the use of On Board Diagnostic (OBD) plugs that transmit data regarding the driving habits of clients back to insurers. OBD plugs are placed into the vehicle’s port beneath the steering wheel. Many consumers are all too happy to plug into the device and allow insurance companies to monitor their driving habits if it means the chance to potentially lower their insurance rates.
Auto insurance companies are not alone in their quest to leverage the power of technology to work more efficiently and reduce costs. Property insurance firms have begun to use drones on an increasing basis in order to assess damages after claims are filed. (For related reading, see: How Internet-Connected Cars Work.)
Investors Taking Notice of Tech Potential
In light of the increasing usage of technology in an industry that has previously been somewhat adverse to new advances, more investors are also now setting their sights on the insurance industry. In fact, many investors now consider the insurance industry to be ripe for technology disruptions. Through such disruptions, the insurance industry could be poised to finally make its move into the 21st century. While the insurance industry has made some progress in terms of implementing technology, there is still much work to be done. Investors are now seriously considering the prospective value of insurance technology.
Over the course of the last five years, investors have put more than $2 billion toward the goal of advancing innovative technology in the insurance industry. More than half of those funds were funneled into the industry within the last two years. Last year saw $556.5 million being invested in insurance technology, while more than $831 million has been invested to date. (For more, see: 20 Industries Threatened by Tech Disruption.)
Risk Assessment Tools
With the advent of smart homes, wearable technology and smart vehicles, insurance companies now find it necessary to re-evaluate the processes utilized for underwriting and risk assessment. These latest advancements present an incredible opportunity to deploy and leverage tools with the capability of delivering value while greatly mitigating risk.
Greater Customer Experience and Improved Efficiency
To date, one of the most common complaints that many consumers have about the insurance industry is poor customer service. This is largely due to the fact that the industry as a whole has remained outdated, particularly where lines of communication are concerned. Today’s innovative tools present a welcome opportunity to handle updated claims, billing, data management and communication via digital devices and smartphones. (For more, see: How Big Data Has Changed Insurance.)
Innovation in insurance technology could also present insurance companies with the opportunity to reach out to consumers based on the information gleaned from plug-in devices. Not only do these devices deliver vital information about driver habits, such as how fast and frequently they tend to drive, but they also provide critical information about where drivers travel on their daily commute. According to some reports, insurers could potentially sell such data to merchants interested in reaching consumers with relevant promotional materials and real-time coupons.
Companies with an interest in purchasing the information made available via tracking devices used by insurance companies include Alteryx, a firm that represents merchants like Dunkin’ Donuts (DNKN), McDonald’s (MCD), and Starbucks (SBUX). Naturally, such companies would find it relevant to know where their potential customers might be at a specific point in time. With the information that could be made available via tracking devices, such merchants could potentially reach drivers via the computer screens in their vehicles, via e-mails, or on their smartphones during their daily commute, thus giving push notifications an entirely new meaning. If there is one challenge to this potential use of information, it would be reluctance on the part of consumers. Currently, there is no indication that insurance companies are planning to sell the data obtained via tracking devices in order to elicit an additional revenue stream, however the potential certainly exists.
Investing in Analytics for the Insurance Industry
The concept of helping consumers to save money on auto insurance, while also providing insurance providers invaluable insight into the habits of drivers, is one that is certainly garnering both attention and investment dollars around the world. Recently, mobile telematics and big data company Driveway Software announced it had closed a $10 million round of funding. Leading the round of funding was Ervington Investments, which represents Roman Abramovich, a prominent Russian businessman.
According to Driveway, the funding will be used to further strengthen the firm’s position as a provider of telematics solutions. Driveway, which operates a smartphone integrated telematics platform designed with the goal of rewarding safe driving, launched just five years ago. Since then, the company has rewarded approximately 250,000 drivers. At the heart of the platform is an Android and iOS app that works seamlessly with cloud analytics to score driver behavior.
Both insurance companies and consumers are able to benefit from the platform. For insurance providers, the platform generates the ability to increase profits by attracting drivers with safe driving habits. Consumers are able to benefit from more personalized pricing and rewards based on their driving habits.
Some of the most valuable assets in your home may be unprotected.
We’re talking about your fine jewelry: your diamond engagement ring, the vintage Rolex Dad left you, the black-pearl necklace you picked up in Tahiti. Sure, you most likely have a comprehensive insurance policy covering your house and furnishings. But homeowners’ or renter’s insurance doesn’t automatically mean every item under your roof is insured (if you’re a renter, you know of course that your belongings are not covered by the property owner’s insurance. See 6 Good Reasons To Get Renter’s Insurance).
In fact, some policies specifically exclude jewelry and other valuables (musical instruments, artwork and furs among them). Other policies limit coverage to certain types of events and to a defined dollar amount. This level of coverage can be significantly inadequate, especially if you want to replace the sort of item that has substantially appreciated in value since its purchase.
What You Need
What’s required, if you have substantial assets of this type, is additional insurance. Known as a rider or, more specifically, a floater (which targets small, moveable items), it takes over when traditional insurance coverage ends, and typically covers the insured item against fire, loss, theft or damage.
Most major insurers do not offer jewelry coverage as a stand-alone product (an underlying property insurance policy is required). But owners of valuables can purchase coverage as an add-on to their existing homeowners’ policy. In fact, most of the more well-known insurers require additional handling for high-end valuables.
Cases in Point
At USAA, for example, a typical homeowners’ policy covers jewelry lost to fire or theft, but not to accidental damage or loss. The coverage limit for jewelry is $10,000 (no per-item limit) and is subject to the policy deductible (the amount you’ll have to pay before insurance coverage kicks in). For more jewelry coverage, a separate policy is necessary.
USAA’s Valuable Personal Property policy covers a broad assortment of accidents and incidents. It will, for example, pay for a replacement diamond if the stone falls out of your engagement ring, or for repair if the ring is accidentally broken. And the deductible is $0. This coverage also applies to musical instruments and fine art. No appraisal is necessary for any jewelry items insured for $15,000 or less, though a receipt or proof of ownership is required when making a claim.
Farmers Insurance has a similar approach. In a typical homeowners’ policy, for instance, jewelry is covered up to $1,000 per item and $5,000 per incident (theft, fire). Damage due to accidents is not protected. Farmers offers riders to cover valuable items, and the deductible is chosen by the insured (starting at $0). In most cases, Farmers requires a receipt or appraisal for each item being insured.
Geico and Allstate offer comparable options. Standard policies limit personal property coverage to $1,000 to $2,000. Riders or floaters are available to increase the amount of coverage, and to cover loss and damage not covered by the main policy.
What To Ask
When you look around for the best policy, keep these questions in mind to ask the insurer:
How exactly claims are handled: Will you be required to purchase a replacement and then request reimbursement,or will the insurer send a check first?
Is the item’s full replacement cost covered and how is that amount determined (especially if the item is antique or custom-made)?
Do coverage limits fluctuate with the price of precious metals or gems?
How often can/should you submit updated appraisals?
What proof of loss or damage will be required?
Which exclusions does the policy have? What types of loss and damage are not covered?
Before buying your policy – and when making additions to it down the road:
Have your item(s) professionally appraised, to determine their value for insurance purposes.
Take photos of the item(s).
If you have the option, as with the aforementioned Farmers Insurance rider, consider increasing the deductible to lower the insurance premiums.
Once your policy is in place:
Keep all your items’ receipts, appraisal paperwork and photos locked away in a safe (but easily accessible) place.
Store items securely when you aren’t wearing them.
Avoid traveling with irreplaceable or extremely valuable jewelry.
The Bottom Line
Most insurance providers offer discounts to customers who purchase multiple policies. If you purchase your home, auto, life and property insurance from a single provider, you are likely to get a better deal overall (see Making Sure Your Jewelry Is Insured).
If you don’t have homeowners’ or renter’s insurance, you may be able to purchase stand-alone coverage from a provider that specializes in insuring jewelry. Some jewelers offer such policies, or can recommend a company that does.
Your vehicle says something about you. And if you drive a lifted 4×4 or ride a Harley-Davidson motorcycle, some people may not like what it’s saying.
That’s according to a new Insure.com/Op4G survey that asked 1,000 respondents which specialty vehicle types they find the most appealing – and which they find the most obnoxious.
The vehicle choices were:
- Sports cars
- Classic muscle cars
- Luxury SUVs
- Electric/hybrid cars
- Subcompact cars
- Lifted 4x4s
- Harley-Davidson motorcycles
- Sport bikes
- Van conversions
- Low-rider cars or trucks
- Rat rods
Perhaps not surprisingly, the type of vehicle respondents cited as most appealing was sports cars. Electric/hybrid cars were the No. 2 choice, and classic muscle cars, luxury SUVs and RVs rounded out the top five.
Yeah, but I drive an Accord
However, when asked if they owned the type of vehicle they found most appealing, only 34 percent of the survey’s sports car enthusiasts said they actually own a sports car. Just 18 percent of the respondents who chose electric/hybrid cars as the most appealing actually own an electric or hybrid car.
Penny Gusner, consumer analyst for Insure.com, notes that while electric and hybrid cars may seem practical because they burn little or no gasoline, they are often more expensive to buy and more expensive to insure than their conventionally powered counterparts – a fact that may deter otherwise interested buyers.
“When we look at insurance costs by model, electric and hybrid cars sometimes cost up to 20 percent more to insure than similar, gas-powered cars,” Gusner says. “And they’re commonly more expensive to purchase too – sometimes in excess of 50 percent.”
Overall, 27 percent of respondents said they own the vehicle type they chose as most appealing.
As for the most obnoxious …
On the other end of the survey, many of the vehicle types people cited as most obnoxious come with their own downsides – not the least of which may be the unfriendly glances they get from other drivers in traffic.
Here are the five vehicle types most cited as obnoxious in the Insure.com survey.
5. Sport bikes
These race-inspired motorcycles boast a power-to-weight ratio that scarcely any automobile can touch, which means these motorcycles can navigate traffic at a pace – and volume – that is virtually all their own.
Five percent of respondents, however, do not feel that their remarkable performance makes them any less worthy of scorn.
4. Harley-Davidson Motorcycles
Harleys, with their low signature rumble and unmistakably American pathos, have been synonymous with rebellion for decades (despite being co-opted by white-collar types in recent years).
But for at least 8 percent of respondents, it’s not necessary to visit Sturgis, South Dakota, in August to feel like they’ve seen too many of these iconic cruisers.
3. Low-rider cars and trucks
Despite their numerous appearances in classic hip-hop videos and an eponymous anthem (War’s 1975 “Lowrider”), these ground-hugging rides aren’t for everyone – including 10 percent of respondents.
After all, creating a low rider requires some dramatic chassis modifications to the vehicle – and a complex system of hydraulics if the driver wants to navigate speed bumps with any confidence.
How deep is America’s love/hate relationship with the Hummer? This extra-wide, extra-thirsty SUV still ranks No. 2 on this list even though the last Hummer rolled off the assembly line in 2010.
For 15 percent of respondents, the ensuing five years have done little to dull their hatred of the original over-the-top SUV.
1. Lifted 4x4s
Yes, the ample ground clearance of a lifted 4×4 can be useful in some off-road settings.
Yet 16 percent of respondents do not believe this justifies the downsides of these high-rolling machines, which can include poorer gas mileage (when compared to a regular truck), cabs that are hard to enter and exit, and an inability to sneak beneath all but the tallest parking-structure ceilings. They also can cost more to insure.
You wouldn’t understand, man
While a lot of drivers may revile the lifted pickups, Harleys and low-riders they encounter in traffic – more than 50 percent of respondents expressed contempt for one of the five vehicle types above – these machines’ countercultural nature is undoubtedly part of what drives owners to choose them in the first place.
“Not many of the vehicles on this list could be considered strictly practical,” says Gusner. “Many of them come with terrible gas mileage, awful car insurance rates or other serious shortcomings. But that’s part of what makes them different from everything else on the road.”
If you look hard enough, you can find insurers willing to protect your business against virtually any calamity – from malpractice to equipment breakdown. But even in today’s crowded insurance market, the need to safeguard against extortion might seem like a bit of a stretch.
That is, until you look at international crime trends. Between 15,000 and 20,000 kidnappings take place around the world in a given year, according to insurance giant Aon. Most of these are done not for any ideological reason, but for profit. Often, an overseas traveler becomes a target because an assailant knows there’s a wealthy family or company that’s willing to pay for his or her safe return.
Extortion insurance is designed to help recoup whatever money has to to be paid by a policyholder in order to save someone – an employee, for example – from the threat of abduction or bodily harm. (If the abduction actually happens, the crimes then include kidnapping.) The policy may also protect against other threats, such as damage to company property or the disclosure of sensitive information. Given the risk – particularly in danger zones like Latin America and the Middle East – most big corporations today have a policy that covers both extortion and ransom demands.
Is It Worth It?
A specialty insurance policy can help companies recoup most of the expenses associated with an extortion plot. Often, that includes the money they directly pay to an assailant – or would-be assailant – as well as the cost of negotiators, lawyers and psychiatric care for any victims. Many insurance companies also offer crisis management services through an affiliated provider.
Extortion coverage isn’t strictly for corporations, however. Some insurers also provide policies to high net worth individuals, who can be just as big a target when they travel abroad. Generally speaking, the greater one’s public profile, the bigger the risk.
Certainly, extortion insurance isn’t something that every company or wealthy individual is going to need. And it can be very pricey.
But considering that experts say the threat is only increasing as criminals become more sophisticated – some even use social media sites to glean information about potential victims – this insurance is worth considering if you or a business is at greater-than-average risk. Added protection may be valuable, for example, if you or a company’s employees routinely travel to hot spots like Venezuela or parts of Africa. There’s also the financial threat to factor in (even for the most profitable firms), as monetary demands have gone as high as $125 million.
Caveats About Coverage
One point to bear in mind is that extortion insurance almost certainly won’t reduce anyone’s risk of becoming a victim. In many cases, employers can’t even let their workers know about the coverage, which would make them ideal targets for criminals.
Also, if you’re thinking about buying a plan for yourself or your business, be advised that filing a claim isn’t always as straightforward as you might think. One complication is that most kidnappers specifically prohibit their victim’s contacts from notifying either the police or the insurance company about their demands. The catch: The insurer may not provide reimbursement if it’s not advised of the transaction ahead of time.
Therefore, it’s important to find a policy without this kind of stipulation, or to try to negotiate it out of the contract. Some insurers only require policyholders to divulge an extortion attempt when doing so won’t further endanger a victim.
In addition, some companies won’t extend coverage to countries where the U.S. government has put into effect a travel advisory. In such cases, there’s an unfortunate irony: The policy may be useless in the very circumstances when it’s most needed.
For potential policyholders, these caveats are all the more reason to research the insurance plan ahead of time to avoid surprises down the road.
Cholamandalam MS General Insurance Company (Chola MS) is a joint venture of the Murugappa Group & Mitsui Sumitomo Insurance Company Ltd, Japan.
Chola MS is part of the Rs 73.4 Billion Murugappa Group, one of India’s largest family-promoted, professionally managed corporate with over 28,000 employees.
A pioneer and market leader in several fields with over 40 manufacturing operations across 12 States in India, the group has a strong presence in farm inputs (Parry, Coromandel Fertilizers and Godavari Fertilzers) engineering and cycles (TI BSA & Hercules), Sugar EID abrasives (Carborundum), finance (Cholamandalam DBS), sanitary ware (Parryware), plantations, bio products and nutraceuticals.
Mitsui Sumitomo is the second largest Insurance group in Japan, with a Net Written Premium (NWP) of 13.5 billion USD in 2005. The company has 733 Sales bases, 257 claims handling offices and about 74, 664 Agents throughout Japan.
While insurance must cover you for major illnesses, we firmly believe that the probability of common diseases is far greater than major illnesses. That’s exactly why Chola Health Insurance helps you manage not just major but also minor illnesses that could occur at any point and without notice. Add to this wide cover a cash free hospitalization benefit that lets you financially manage any sudden illness more effectively.
In addition, with simple procedures and smoother claim processes you can be sure that Chola Health Insurance is the perfect way to manage any health crisis that might come your way.
Shopping for insurance sounds about as exciting as doing your taxes, but when it comes to wedding jewelry – engagement rings and wedding bands – securing sufficient coverage can prove as essential as any other wedding-related task.
In 2014, couples spent an average of $5,855 on engagement rings. Add to that the cost of wedding bands for both the bride and groom and it’s clear that the average $1,500 to $2,500 of jewelry coverage available through renter’s and homeowner’s insurance is insufficient for most couples.
Assess Your Existing Coverage
While renter’s and homeowner’s insurance policies cover the value of items in your home, jewelry included, coverage only goes up to a certain dollar limit, and circumstances like loss and damage are usually not included.
Engagement and wedding rings can be covered more comprehensively with the purchase of a rider or extension to your current policy – also called “scheduling property.” Scheduled personal property goes over and above the typical renter’s or homeowner’s policy so that the full value of the designated, high-priced item is covered in the event of a claim.
If you don’t have a renter’s or homeowner’s policy, or the coverage through your existing insurance provider is insufficient, you can purchase a separate policy specifically for your rings. Ask your jeweler if the company offers or recommends a certain policy, or shop around to find an insurance broker with jewelry coverage that suits your needs.
Read the Fine Print on Potential Policies
When it comes to choosing a provider and policy for your ring insurance, the fine print matters. Here’s what to consider:
• Coverage. A good policy should cover all contingencies, from theft to damage to an accidental drop down the garbage disposal. Make special note of anything that isn’t covered.
• Replacement. How will the insurance company replace your rings? Will you have to obtain your replacement rings at a certain jeweler? Will you receive a check as compensation? Will repairs or partial loss be covered? Evaluate the replacement policy against your fiscal and sentimental concerns.
• Assessment of Value. How will the insurance provider assess the value of your ring for reimbursement? Will it use the current appraisal value or will it only consider the price at purchase?
• Documentation Requirements. Note all of the required paperwork for your policy so that should you need to file a claim, everything is readily available. This typically includes receipts, photos and up-to-date appraisals.
Speaking of appraisals…
Know the Value of Your Rings
A professional jewelry appraisal can help you make sure your rings are insured at their proper value. Choose a gemologist-appraiser to verify facts about the ring while also assessing its value. The American Gem Society has a directory of qualified professionals that can be searched by zip code. Appraisal rates range from $50 to $150 an hour. Be sure to ask around for estimates before committing.
It’s important to compare not just the cost of one insurance provider to another, but also the relative cost to the relative coverage, as both vary greatly from provider to provider and even from policy to policy.
The general rule of thumb for insuring wedding and engagement rings is $1 to $2 for every $100 of value, paid annually. A $5,000 ring, for example, would cost around $50 to $100 per year to insure. If you live in a city where the risk of theft is higher, you can expect to pay a bit more for your coverage. However, you can reduce costs by installing a home security system or by using a safe to keep jewelry protected when it’s not being worn.
In addition, some policies have deductibles, others don’t. Those without deductibles have higher premiums. In the case of a deductible policy, look to see what types of repairs can affect your coverage costs.
After you’ve combed through the policy fine print, assessed the value of your rings and compared relative costs, you should have enough information to choose an insurance policy that meets your needs. Don’t wait too long to secure coverage, though. You’ll want to make sure you’re protected in the event that anything happens in the days after your purchase or receipt of the ring.
Once You’re Insured…
• Keep all insurance-related documents in a safe place. By this point, you should be familiar enough with the details of your policy to know exactly what documentation you need to keep on file – a written appraisal, ring receipts, photos, gem certificates, etc. Also make sure that any policy details you’ve discussed with your insurance agent are included in the paperwork. All promises need written documentation.
• Consider having an appraisal done every two to three years – even if your insurance policy doesn’t require regular appraisals – to ensure that your insurance coverage is still adequate. This is particularly important for vintage, antique and/or collectible rings. Values of precious metals and fine jewels change frequently. Bring a copy of your original or most recent appraisal each time so that your appraiser can work from that rather than starting from scratch each time. This can help reduce your costs.
• Make sure your ring fits. It might sound obvious, but getting your ring properly sized can reduce your chances of ever having to file a claim with your insurance company.
The Bottom Line
If, how and where you decide to insure your wedding rings will depend largely on your specific needs and assessments of value. By doing your due diligence in combing through the fine print of potential policies and comparing true costs and coverage, you can ensure you’ve made a proper assessment in protecting jewelry that has both monetary and emotional value.
Healthcare in the U.S. costs about twice as much as it does in any other developed country. If the $3 trillion U.S. healthcare sector were ranked as a country, it would be the world’s fifth largest economy according to “Consumer Reports.” The cost of this huge financial burden to every household because of lost wages, higher premiums and taxes plus additional out-of-pocket expenses is more than $8,000.
Even with all this money being spent on healthcare, the World Health Organization ranked the U.S. thirty-seventh in healthcare systems, and The Commonwealth Fund placed the U.S. last among the top 11 industrialized countries in overall healthcare.
Why is the U.S. paying so much more for care and not appearing at the top of the rankings? Here’s a look at six key reasons the U.S. is failing to provide adequate healthcare at reasonable prices.
1. Administrative Costs
The number one reason our healthcare costs are so high, says Harvard economist David Cutler, is that “the administrative costs of running our healthcare system are astronomical. About one quarter of healthcare cost is associated with administration, which is far higher than in any other country.”
One example Cutler brought up in a discussion on this topic with National Public Radio was the 1,300 billing clerks at Duke University Hospital, which has only 900 beds. Those billing specialists are needed to determine how to bill to meet the varying requirements of multiple insurers. Canada and other countries that have a single-payer system don’t require this level of staffing to administer healthcare.
2. Drug Costs
Another major difference in health costs between the U.S. and every other developed nation is the cost of drugs. The public definitely believes drug costs are unreasonable; now politicians are starting to believe that too. In most countries the government negotiates drug prices with the drug makers, but when Congress created Medicare Part D, it specifically denied Medicare the right to use its power to negotiate drug prices. The Veteran’s Administration and Medicaid, which can negotiate drug prices, pay the lowest drug prices. The Congressional Budget Office has found that just by giving the low-income beneficiaries of Medicare Part D the same discount Medicaid recipients get, the federal government would save $116 billion over 10 years. Think of what the savings might be if all Medicare recipients could benefit from Medicaid-negotiated drug prices!
3. Defensive Medicine
Yet another big driver of the higher U.S. health insurance bill is the practice of defensive medicine. Doctors are afraid that they will get sued, so they order multiple tests even when they are certain they know what the diagnosis is. A Gallup survey estimated that $650 billion annually could be attributed to defensive medicine. Everyone pays the bill on this with higher insurance premiums, co-pays and out-of-pocket costs, as well as taxes that go toward paying for governmental healthcare programs.
4. Expensive Mix of Treatments
U.S. medical practitioners also tend to use a more expensive mix of treatments. When compared with other developed countries, for example, the U.S. uses three times as many mammograms, two-and-a-half times the number of MRIs and 31% more Caesarean sections. This results in more being spent on technology in more locations. Another key part of the mix is that more people in the U.S. are treated by specialists, whose fees are higher than primary-care doctors, when the same types of treatments are done at the primary-care level in other countries. Specialists command higher pay, which drives the costs up in the U.S. for everyone.
5. Wages and Work Rules
Wages and staffing drive costs up in healthcare. Specialists are commanding high reimbursements and the overutilization of specialists through the current process of referral decision-making drives health costs even higher. The National Commission on Physician Payment Reform was the first step in fixing the problem; based on its 2013 report, the commission adopted 12 recommendations for changes to get control over physician pay. Now it is working with Congress to find a way to implement some of these recommendations.
“There is no such thing as a legitimate price for anything in healthcare,” says George Halvorson, the former chairman of health maintenance organization Kaiser Permanente. “Prices are made up depending on who the payer is.”
Providers who can demand the highest prices are the ones that create a brand everyone wants. “In some markets the prestigious medical institutions can name their price,” says Andrea Cabarello, program director at Catalyst for Payment Reform, a nonprofit that works with large employers to get some control on health costs.
The Affordable Care Act (ACA) has pushed back to some degree against the high costs created by branding. In central Florida, for example, one of the top brands is Florida Hospital. This year ACA policies offered by Humana did not include services provided by this brand. Similar types of contract negotiations knocked out top hospitals in other locations. It remains to be seen whether this will cause those hospitals to reduce prices to get those patients back.
The Bottom Line
Most other developed countries control costs, in part, by having the government play a stronger role in negotiating prices for healthcare. Their healthcare systems don’t require the high administrative costs that drive up pricing in the U.S. As the global overseers of their country’s systems, these governments have the ability to negotiate lower drug, medical equipment and hospital costs. They can influence the mix of treatments used and patients’ ability to go to specialists or seek more expensive treatments.
So far in the U.S., there has been a lack of political support for the government taking a larger role in controlling healthcare costs. The most recent legislation, the Affordable Care Act, focused on ensuring access to healthcare, but maintained the status quo to encourage competition among insurers and healthcare providers. This means there will be multiple payers for the services and less powerful control over negotiated pricing from providers of healthcare services.
The “Good Hands” people at Allstate have figured out a shady, possibly illegal, way to push up insurance rates, according to the Consumer Federation of America, which said Tuesday it discovered a letter from the insurance giant that is a “smoking gun.”
And the group, one of the most influential consumer advocacy groups in the nation, said the implications to American consumers over what Allstate (ALL) is doing is huge and can impact anyone with car insurance.
“This is a watershed moment in the history of insurance consumer protection,” J. Robert Hunter, CFA’s Director of Insurance and the former Texas Insurance Commissioner, said in a statement. “If regulators don’t block this scheme immediately, American consumers will pay a huge price. While we are forced by law to buy these companies’ insurance products in order to drive, there seems to be nothing stopping them from targeting millions of unsuspecting customers with unnecessary and unjustified price hikes.”
The CFA said Allstate created a new way to calculate rates that creates sometimes sharply higher rates aimed at consumers who are “unlikely shop around to find a better price.”
Among the ways the new surcharges and policy adjustments are unfair, the CFA said, includes a random price adjustment based on the month someone was born. As an example, a 46-year-old man with a good driving record who was born three months after another 46-year-old man with a good driving record could be charged 30 percent more on his premium, the CFA said.
Allstate issued the following statement in response to the CFA report:
“Allstate is committed to operating with absolute integrity. The Consumer Federation of America’s allegations are inaccurate. The primary allegation in the news release regarding date of birth is grossly mischaracterized and does not take into account all of the risk characteristics for these two individuals. Our rating plans, including Complementary Group Rating Plan, have been and continue to be risk-based.
“Marketplace considerations, consistent with industry practices, have been appropriate in developing insurance prices, and we are open and transparent with regulators. The Complementary Group Rating Plan meets customer needs in the market place, and our success in increasing new customers and renewing more existing customers in the competitive insurance environment is evidence of this.”
Allstate is just one company, the CFA said, that has worked with consultants to create a broad array of pricing tables intended to push up profits. The price differences are determined using “marketplace considerations,” which doesn’t involve risk, and can result in anything from “a 90 percent discount off the standard rate to increasing his or her premium by 800 percent, depending upon Allstate’s analysis of the individual policyholder’s ‘marketplace considerations.’ ”
The Consumer Federation sent a letter regarding its findings to every state’s insurance commissioner.
“Allstate’s insurance pricing has become untethered from the rules of risk-based premiums and from the rule of law,” Hunter said. “Unfortunately, we believe that Allstate is not alone in using this new and patently unfair approach to auto insurance pricing, they are just the first to be unmasked.”
Term life insurance vs permanent has been the center of active and thought provoking debate ever since the idea of term life insurance came to man’s mind.
Term insurance is without question cheaper than permanent life insurance but when compared with the value built into the latter people have varying ideas as to which is best. What about the cash values and dividends you get from permanent policies?
Do you just ignore these? How can cash values and dividends be used to offset cost? Questions worth answering aren’t they?
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The ever constant innovation of life insurance policies make it more and more difficult to come to a consensus. Term life insurance vs permanent will continue to provoke the thoughts of anyone considering a life insurance purchase. Because term is simplest I will discuss that one first then I will get to the complexities of permanent life insurance and it’s varying alternatives.
- The Advantages Of Term Life Insurance
What life insurance companies have attempted to do with term life insurance, and have been fairly successful at doing it, is to strip the life insurance policy of as much of the front end load as possible. They have been more successful in doing this with some policies than with others.
You may think that because of this success term life insurance vs permanent would no longer a debate of interest…but you would not be correct. Let us take the increasing premium term policy for example. This is a good policy to dissect when discussing term life insurance vs permanent.
The lower premiums in the younger years result from the fact that the applicant is less likely to die within a given period, the term period, than an older person. Term life insurance is life insurance in it’s simplest form taking into consideration mortality based on actual experience.
If we were to examine a decreasing term life insurance policy the decreasing annual premium reflects the decrease in the death benefit each year, also bearing in mind the fact that the insured is getting older each year.
People like the way this is done because they believe that at no time they are paying more than for the term life insurance they actually want.
- Advantages Of Whole Life Insurance
Comparing term life insurance vs permanent we notice that the whole life insurance premium is loaded up front. The life insurance company take most of the cost to issue a whole life policy in the first few years.
There are clerical costs, medical costs if the policy is large enough or if they are dealing with an impaired risk, and of course agents commissions etc. Whole life costs more. Term life insurance vs permanent…should we continue?
As you will see, we should. If the costs are less than anticipated, and they usually are, they return that portion of unused premium. This is called a cash value. This cash value earn dividends which, if left with the company, accumulate interest. There are alternate dividend options that you may elect.
If you were to deduct the cash value of a life insurance policy plus the dividend after 20 years from the amount you paid in premiums you would see that the policy cost nothing over that period. But, hold on.
We have to consider what those dollars, over and above the cost of term life insurance, would have been doing had they not been in the whole life policy. What rate of interest would be available. We should also bear in mind that dividends are not guaranteed.
The advocates of buying term when examining term life insurance vs permanent contend that the money would be earning the maximum over that 20 year period. On the other hand, the advocates for permanent life insurance assume that the extra premium would not be saved or invested.
There is truth in both arguments but, because each person is different, we cannot come to a definite conclusion as to which is best. If you can afford to buy any policy you choose, do your comparisons for yourself and go with your gut. Term life insurance vs permanent…you decide.
The concept of social health insurance is deeply ingrained in the fabric of healthcare systems across the European continent. Insurance products and services in the form of universal healthcare that are publicly sponsored and regulated in nature are available to the masses across Europe which varies in characteristics across the European continent. Under the publicly sponsored products, certain nations in Europe provide simply the basics popularly termed as “sick coverage” only. Incase, any citizen requires additional coverage to meet their requirements, the option of supplemental insurance can be availed in the form of additional cover for propping up the security of an individual. Countries offering universal health care across Europe include Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Ukraine and the United Kingdom (UK).
Read more: Health Insurance in Europe http://www.medindia.net/patients/insurance/health-insurance-in-europe.htm#ixzz3jKJzsFqE
Couples spent an average of $5,855 on their engagement rings in 2014 and, of course, it’s easy to spend a good deal more. Coverage of jewelry through renter’s and homeowner’s insurance remains limited, though, with most policies paying out a maximum of $1,500 to $2,500 – a fraction of what the newly engaged or married stand to lose should damage or theft befall their rings.
Check Your Current Coverage
Before making any additional policy purchases or changing your insurance, check to see what coverage you already have through your renter’s or homeowner’s policy and how that coverage compares to the value of your rings.
For example, your insurance policy may have a personal property limit of $1,000 per item of jewelry. If the value of your ring falls below that threshold, you may not need to purchase any additional coverage. (See Making Sure Your Jewelry Is Insured.)
Before checking wedding-ring insurance off your list of nuptial to-dos, though, read through the remainder of the personal property policy. Are there any group limits on your jewelry, i.e. a limit for the collective value of all items in addition to each individual piece? If so, you may need to reassess the sufficiency of your coverage compared to the value of what you own.
Get An Appraisal
In addition to providing a definitive value for your rings, an appraisal is often required when purchasing supplemental insurance coverage. Before you go for one, take a look through potential jewelry coverage options to make sure the appraisal you get will adhere to the required guidelines of the insurance company.
To find an appraiser with proper training and credentials in your area, search the directory of the American Gem Society. Be prepared to pay around $50 to $150 per hour for the service. (For more, see Introduction To Gemology.)
Consider Coverage Options
If the value of your rings exceeds your current coverage, consider additional insurance options.
You can add an extension or rider to your current renter’s or homeowner’s policy, or you can insure your rings through a company that specializes in jewelry insurance. To help you decide between options, read through the fine print of potential policies considering the following:
• What is and isn’t covered? Theft? Damage? Accidental loss?
• How will coverage be provided? Replacement rings? Check? New rings through a specified jeweler?
• Will insurance cover the full value of the rings? How will the value be determined – original cost, initial appraisal or current value?
• What will you need to make a claim?
In addition to these fine-print considerations, compare the costs of the insurance deductible against the coverage. These numbers can differ significantly from company to company and even from policy to policy. For more, see Looking To Insure Your Wedding Ring? Here’s How.
You should speak to an insurance agent to get an exact quote, but expect to pay an annual rate of $1 to $2 for every $100 your ring is worth. The average $5,855 engagement ring for example, would cost around $59 to $118 annually to insure.
Is it worth it? Before answering yes or no, consider other potential costs. How often will you need to have your rings reappraised? Is there a deductible?
You may be able to lower your insurance premiums (while providing additional protection for your rings) by installing a home security system or purchasing a safe or safe deposit box to store your rings when they’re not being worn.
Be sure to keep all corresponding paperwork in a safe place as well. Anything you might need to make a claim – such as appraisals, receipts and photos – should be as protected as the rings themselves.
The Bottom Line
Considering the reported average costs of today’s rings, protecting your engagement and wedding rings with insurance is probably a good idea. If you decide to go the more economical route – choosing rings that would be covered under the modest personal property allowance of your renter’s or homeowner’s insurance policy – then it might be worth forgoing coverage. Accidental loss is generally not covered under these policies, but an inexpensive ring may be cheaper to replace anyway.
An insurance claim prepared with the intention to deceive, conceal or distort relevant information that eventually accounts for health care benefits for an individual or a particular group is defined as fraudulent health insurance claim.
Frauds can be committed by anybody – either by a policyholder, a healthcare provider or even its employees.
Frauds committed by a policyholder could consist of members that are not eligible, concealment of age, concealment of pre-existing diseases, failure to report any vital information, providing false information regarding self or any other family member, failure in disclosing previously settled or rejected claims, frauds in physician’s prescriptions, falsedocuments, false bills, exaggerated claims etc
Frauds by Healthcare Provider or its employees include preparation of bogus claims by fake physicians, billing for products or services not rendered, exaggerated claims submission, billing prepared for higher level of services, modifications or alterations made in submission of claims, change in diagnosis of the patient, fake documentation, and fraud committed by the employees of a hospital or any other healthcare product/service provider in order to make a quick buck.
Fraudulent and dishonest claims are a major morale and a moral hazard not only for the insurance industry but even for the entire nation’s economy. Concrete proof as evidence including documentation, statements made by the policyholder and his family members and even neighbors are taken into consideration.
Essential Components of Fraud
The essential components of fraud include intention to deceive, derive benefits from Insurance industry, preparation of exaggerated or inflated claims or medical bills and malafide intention to induce the firm to pay more than it otherwise would. Devising innovative methods and tactics including pressure tactics, favoritism, nepotism etc form a part of fraud which is a hazard growing by leaps and bounds since the last decade.
To establish that a fraud has been committed requires furnishing of relevant proof. An in-depth analysis of the policyholder’s intention may also be taken into consideration.
Statistics in India and USA
According to a recent survey it is estimated that the number of false claims in the industry is approximately 15 per cent of total claims. The report suggests that the healthcare industry in India is losing approximately Rs 600-Rs 800 crores incurred on fraudulent claims annually. Health insurance is a bleeding sector with very high claims ratio. Hence, in order to make health insurance a viable sector, it is essential to concentrate on elimination or minimization of fake claims.
Insurance companies in USA incur losses over 30 billion USD annually to healthcare insurance frauds.
Enactment of HIPAA by USA to deal with Health Insurance Fraud
Due to fraudulent cases especially health claims on the rise in USA, a special legislation was enacted by Congress with the introduction of HIPAA (Health Insurance Portability and Accountability Act) in 1996. This act specially deals with healthcare fraud which is treated as a Criminal Offence accompanied with rigorous imprisonment up to 10 years with additional financial penalties depending on the fraud intensity.
The insurance industry often urges customers to check their policies every once in a while to make sure everything is up to date. While that sounds like self-serving advice — because you know any conversation with your insurance agent will end with a pitch to buy more insurance — it’s actually a good idea.
As Bill Swymer, an adjunct finance professor at Bentley University in Waltham, Massachusetts, observes: “The No. 1 reason people need to be reviewing all insurance policies is because circumstances change, and you do not want to be left underinsured or paying for insurance you no longer need.”
If you bought life insurance when you were married or after your first child was born, and you’re now on baby No. 4, you’re probably long overdue for an upgrade. Or maybe after you bought a new car, your insurance policy covered you for every possible circumstance. If you’re now driving a clunker that isn’t worth the gas you’re putting in the tank, you are probably vastly overpaying for your coverage. Some other things you might realize in a review.
You Might Catch Mistakes
You probably have a lot of insurance policies — health insurance, life insurance, auto insurance, homeowners insurance. There may be an error or two or three in one or more of those policies. For instance, Aflac, which provides supplemental health insurance, found in its annual employee benefits study, which surveyed 5,209 employed adults and 1,856 benefits decision-makers at companies, that 42 percent of workers waste up to $750 each year on insurance benefit mistakes.
You Might Find Better Rates
Ken Davidson, co-founder of Dallas-based Eagle Independent Insurance, points out that you may lower your premium if you regularly compare insurance quotes. “Insurance premiums can frequently change for several reasons,” he says, citing homeowners insurance as a type you’d want to look at fairly often. The crime rate, for example, could go up or down, changing your rates. You may have purchased your homeowners insurance policy after recent storms inflated rates, and perhaps yours haven’t come down but competitors’ rates have.
“So only by comparing different policies at every renewal period — or even more frequently — can consumers ensure they’re getting the best deal at that time,” Davidson says.
You Might Find More Assets That Need Coverage
Your life doesn’t just change. What you cover does. Leigh Needelman, CEO of Florida Assurers, an insurance agency in Miami Beach, Florida, recalls a client whose diamond ring was stolen in a home burglary. Fortunately, it was insured, and the client was sent a $6,000 check. So the client went to the jeweler to replace the diamond ring. But she wasn’t able to replace the diamond ring — or if she did, she had to kick in a lot of her own money. “When the jeweler was given the check to replace the diamond ring, he advised [her] that the ring had appreciated to $18,000,” Needelman says.
Even if you aren’t concerned about insuring your engagement ring — maybe you’re single or need a microscope to see the diamond and figure it isn’t worth the trouble — if you’ve been around a while, you have probably collected some stuff over the years, and perhaps a lot of it is expensive. For instance, maybe you locked in your home insurance rates when your new home was filled with secondhand furniture. If all of that has been replaced with sofas and a dining room table purchased from an actual furniture store, and that 20-inch TV was swapped for a 60-inch set, it may be time to discuss these upgrades with yourhomeowners insurance agent.
Sure, you’ll likely see your rates go up, which is painful, but if a disaster occurs, you’ll actually be covered for what you own. According to Liberty Mutual New Beginnings Report, which surveyed 1,936 American adults, fewer than one in five Americans adjust their insurance policy after making a major purchase. Only 18 percent have formal documentation of their belongings, meaning, apparently, that everyone else just makes an estimated guess and stores all the information in their heads. One-third of Americans don’t know the value of their household possessions, and almost 10 percent are unaware that they should check to make sure they have enough coverage to protect their belongings from theft or damage, the study found.
You Might Decide It’s Time to Bundle
If you have four different policies with four different carriers, you might want to bundle a few. That is, have your homeowners and car insurance with one company, for example. You can often get discounts of at least 10 percent when you start bundling, says David Spencer, a senior vice president at ACE Private Risk Services, which offers insurance for high-net-worth individuals and businesses.
You Might Get Some Discounts
Yes, your insurance agent may talk you into buying more insurance, but at the same time, you may learn that you’re due for some discounts. “Homeowners can earn credits on premiums by installing safety devices like burglar alarms, water leak detection systems, battery backups for sump pumps and automatic standby generators. When combined, these credits can reduce homeowners’ premiums by 30 percent or more,” Spencer says.
Think about that. If you bought a security system months ago, or years ago, and you didn’t tell your homeowners insurance agent, you have probably been overpaying on your homeowners insurance for some time.
There are countless startups sitting on mountains of venture capital money and promising to change the world. Most journalists have focused on the world of payments, and that focus only increased with the launch of ApplePay. But ApplePay offers convenience, not value. While it is fun using an iPhone at a checkout (if you are lucky enough to find one that accepts ApplePay), it certainly won’t help you prepare for retirement.
Technology is finally being used to transform consumer financial services in a dramatic way. You no longer need to settle for 0.01 percent on your savings account. It has never been easier to shop for cheaper auto insurance. You don’t have to pay 25 percent interest on that store credit card. You don’t have to pay 1 percent (or more) to have customized financial planning. Even student loans can now be refinanced at dramatically lower rates, thanks to innovative startups, and not traditional banks.
Here are the five biggest innovations that can actually save you significant money and help you retire early.
- Branch-free banks deliver savings accounts with rates 100 times better than traditional banks. The largest banks are paying an average of 0.01 percent on basic savings accounts. If you have $25,000 in an account, you will earn a ridiculously low $2.50 interest over the next 12 months. You could easily earn $280 by switching to an Internet-only savings account paying 1.15 percent. And it is easy to find some of the best interest rates online, by using a comparison site like MagnifyMoney, which I operate.
- Shopping for the best auto insurance premium is easy and quick. The majority of Americans use an agent to make a decision. But agents are tied to just a handful of auto insurance companies and usually cannot give you a full comparison. A number of new websites offer you the ability to compare auto insurance easily and quickly online. One of the best is TheZebra, which has compared over 1,700 products from more than 200 insurance companies. In just a few minutes, and without giving any personal information, you can very quickly see how much you could save on a quote. Even if you don’t want to change providers, it is worth doing a quick test drive and seeing if you qualify.
- Personal loan companies give you alternatives to obscenely high interest rates on credit cards. Store credit cards regularly charge 25 percent, regardless of your credit quality. And credit cards typically charge 15 percent or more. Historically, the only real way to save money was to surf your debt from one balance transfer to another. However, over the last few years, some dynamic new personal loan companies have been created. LendingClub is the most famous, and borrowers refinancing credit card debt cut their interest rates an average of 31 percent. Even better, you can apply for most of these loans without hurting your credit score. If you are looking to refinance your credit card debt and cut up those cards, shop around for the best deal. Go toMagnifyMoney’s personal loan comparison page to find the best rate.
- Low, flat fees for financial planning boost your return. If you go to a traditional brokerage, you will quickly realize that they make money from commissions on trading. As a result, they have a tendency to encourage frequent trading and more expensive products. The data is clear: consistently beating the stock market with actively managed mutual funds is virtually impossible over time. However, stock brokers still make plenty of money trying and failing to do just that. Many financial planners charge a percentage of assets (typically 1 percent) and provide better advice. All of that is changing with companies like Betterment. They charge a low, flat fee to provide financial planning. If you have $100,000 invested, you could save $55,000 over 20 years, by paying only 0.15 percent of your assets as a fee.
- Companies can refinance student loan debt at lower rates.Interest rates on student loan debt can be extremely high, and America’s student loan debt exceeds credit card debt. It isn’t a surprise that innovative companies are looking to help qualified borrowers refinance student loan debt. The leader in this market is SoFi, whose variable rates start as low as 1.9 percent. The savings over a lifetime can be dramatic.
I lived in the Silicon Valley during the first dot-com boom. Sock puppets were trying to sell us pet food, and financial services were left largely untouched. All five of these new business models present existential threats to the profitability of big, entrenched banks and financial service companies. That is great news for consumers. Hopefully everyone will be moving their emergency fund to an online bank, refinancing their credit card and student loan debt to low interest rates, slashing their auto insurance premiums and virtually eliminating investment fees. Technology has the power to put more money in our pockets. It is now up to us to use that power.
The lines at the car rental counter can be long, and everyone standing there has a target on them.
For a lot of travelers, by the time you get off the plane and make it to the car rental counter, you’re either tired or eager to get where you’re going — or both. And that’s just the way the folks who rent you cars want it.
The less in tune you are with what they’re doing and the less focused you are on what they’re trying to sell, the more likely you are to spend money on unneeded upgrades and get stuck with other charges that you can — and should — avoid.
Car rental agents are rewarded for how much they can get you to add. Here are five areas to pay close attention to when renting a car, or you’ll run the risk of paying far more than necessary:
1. The fine print. Understand the terms of your rental. If you rent a car for a week for $200 and bring it back after six days, what will you pay? The deal you might have gotten was based on a seven-day rental. You could be charged a far higher rate or even face a penalty for bringing it back too soon. Maybe not, but you ought to know that before you drive away. Make sure what is included in the price and what isn’t. Sometimes, airport fees and additional charges can make what seems like a cheap rental expensive.
View all Courses2. Insurance. Car rental agents can be relentless in their push to get you buy their insurance, which is couched in confusing terms like “collision damage waiver.” The best defense against that is to call your car insurance company before you leave home and see what it covers. Then follow up with a call to your credit card company, since many cards offer supplemental coverage to what your auto insurer covers. Car rental companies will charge you for roadside assistance (millions of Americans have access to that through AAA and other services) and the time a vehicle can’t be rented because it’s being fixed (ask your insurer about “loss of use” coverage).
3. Damage charges. The complaints are repeated over and over again. A consumer gets a bill from a car rental company for damage that they didn’t think they are responsible for. If you can’t make the case with any evidence, you’ll not likely to get off the hook. Be sure to thoroughly inspect the vehicle prior to pulling out of the parking spot, and make sure any damage is noted before leaving. Take photos of the vehicle using a camera or smartphone that has a time stamp, paying particular attention to any existing damage.
4. Gas charges. Prepaying for a tank of gas is a sucker’s bet. But be clear about the rules for how much gas has to be in the car when you return it and whether you need a receipt, as well as how far you’re allowed to drive from a gas station. Seriously. Driving more than 10 miles after filling up your tank could lead to a penalty. Or failing to show your receipt could negate bringing it back full.
5. The upsell. That could be anything from getting you rent a bigger car to paying a daily fee for a GPS or a toll transponder. Anything you’re going to get charged for on a daily basis or prepay from a car rental agency is going to be money you could have saved. Do you really need to rent a GPS in today’s world of smartphones? Do you really want to pay a premium to pay tolls? Need a car seat? Bring one.
Some fears are hardwired into humans, and for good reason: Lightning storms, towering heights and predatory animals have signaled danger since the beginning of human history.
But what isn’t hardwired into humans is the likelihood that a given danger will be fatal. For instance, numerous people struggle with a fear of flying, though the odds of dying in an airplane crash are remote. Yet comparatively few people dread traveling in an automobile, which statistics show brings a much higher chance of death.
To put in perspective what people should really worry about, the National Safety Council (NSC) this month released a list of fatal accident types, ranked by the odds that they will bring about the average person’s demise. The results reveal that some of the things humans fear intrinsically are among the least likely to actually cause their deaths.
One caution: These odds are statistical averages for the U.S. population, which means that they do not represent any one person’s chance of dying from these things. In other words, if you ride your bike 15 miles to work each day down a busy thoroughfare, your odds of dying in a cycling accident are probably higher than the national average (1 in 4,535).
With that said, here are five frightening calamities from the NSC list that aren’t likely to kill you – along with five ordinary things that might.
No. 1: Lightning
Odds it will kill you: 1 in 164,968
There are few dangers that cause a more visceral response than a too-close-for-comfort flash of lightning (and the subsequent crack of thunder). But as a murderer, lightning has an incredibly low success ratio.
A National Oceanic and Atmospheric Administration (NOAA) study indicates that 261 people were killed by lightning in the U.S. from 2006 to 2013. Males represented 81 percent of these deaths, something that the NOAA attributes in part to males’ willingness to put themselves in more vulnerable positions in storm conditions.
So if you’re a woman, even the long odds above may overstate the dangers of lightning.
What may kill you instead: Chronic lower respiratory disease (1 in 28 odds)
No. 2: Dog attack
Odds it will kill you: 1 in 116,448
The approach of an unfamiliar dog – particularly if it’s a large or otherwise intimidating breed – is enough to prime virtually any human’s fight-or-flight system. And again, there’s good reason for this: 4.5 million people are bitten by dogs every year, according to the American Veterinary Medical Association (AVMA).
Yet fatal dog attacks on humans are very rare. The AVMA reports that 31 people died of dog bites in the U.S. in 2013.
Perhaps dogs don’t strike fear in your heart? Many other potentially deadly animals pose even less of a threat to humans. Sharks, for instance, are significantly less likely to get you than even dogs: Three people worldwide died from shark attacks in 2014, according to the University of Florida, and none of those attacks occurred in the U.S.
What may kill you instead: Overdosing on opioid prescription painkillers (1 in 234 odds)
No. 3: Commercial plane crash
Odds it will kill you: 1 in 96,566
From an evolutionary perspective, the fear of flying makes sense. Even moderate heights have always posed a threat to people, and modern aircrafts take those anxieties, literally, to new heights.
But despite a string of high-profile plane crashes in 2014 – 12 commercial aviation accidents resulted in 761 deaths, according to the Aviation Safety Network – flying remains one of the safest ways to travel long distances. In 2013, 265 people died in commercial aviation accidents, making it the safest year for commercial aviation since 1945.
What may kill you instead: Motor vehicle crash (1 in 112 odds)
No. 4: Cataclysmic storm
Odds it will kill you: 1 in 6,780
From gusting winds to flash floods, there’s no shortage of ways storms can kill you – a fact underlined by last month’s tragic storms in the Midwest, which caused at least 31 fatalities across Texas and Oklahoma.
Still, U.S. residents on the whole have a good record of guarding themselves against storms and other types of weather phenomena. The NOAA reports that 446 people died from weather-related factors in 2013, and that figure includes such varied causes as rip currents (which caused 65 deaths), avalanches (21 deaths) and even fog (1 death).
What may kill you instead: A fall (1 in 144 odds)
No. 5: Earthquake
Odds it will kill you: 1 in 179,965
What’s scarier than the earth shaking beneath your feet? When it comes to the chances it will kill you, almost everything – at least in the U.S.
While earthquakes have caused numerous deaths around the world in recent years, including the dozens killed in last month’s magnitude-7.3 quake in Nepal, the U.S. has suffered only three earthquake fatalities in the last 20 years (one from a 1995 quake in Wyoming and two from a 2003 Central California quake), according to the United States Geological Survey.
What may kill you instead: Walking down or crossing the street (1 in 704 odds)
Expect the best but prepare for the worst
To paraphrase a quote from American newspaperman Sydney J. Harris, an important thing to remember about life is that no one gets out of it alive. But that’s no excuse to take a careless attitude toward death.
June is National Safety Month, which makes it an especially inappropriate time to march carelessly into a lightning storm or offer a snarling dog a treat from your pocket – no matter how remote the chances that those things will kill you.
Moreover, even if you do practice good safety habits, it may also be a good time to examine your life insurance coverage – particularly if you have children or other dependents. A term life insurance policy can bring you peace of mind regardless of what dangers you encounter, and it may run you as little as $160 per year if you are relatively young and healthy, according to LIMRA, an insurance industry trade group.
True, some of your worst fears may not be likely to claim you. But when it comes to death, there’s little sense in tempting fate.
I saw a segment on a news show recently that highlighted a family whose insurance company had canceled their renters policy. The family in question filed two claims against their policy over the holidays, after burglars broke into their home before Christmas and again just before New Year’s. As a result, their insurer dropped them.
Of course, the timing was horrible, and the local media covered the story exhaustively. But I’m glad the insurance company canceled their policy, and you should be happy, too. Here’s why:
What are the odds of a family having two robberies in such a short span of time? It’s very unlikely. In fact, such unusual circumstances are strong warning of potential fraud. And while I don’t want anyone to needlessly suffer, if insurance companies don’t take action when faced with those sorts of events, it could translate into higher insurance costs for the rest of us.
It All Comes Down to Higher Rates for All of Us
Most people forget that most insurance coverage is typically a group policy. Insurance companies, whether they’re selling property insurance or life insurance, depend on large groups of people acting as participating partners. It’s the law of large numbers at its finest.
View all Courses Insurers have armies of actuaries whose sole job is to determine the likelihood of a payout on a given policy. Our policies, and their profits, depend on most people paying their insurance premiums and hardly ever needing to file a claim. That, combined with the actuaries ability to make accurate predictions, is what keeps premiums relatively low for the rest of us. Having one customer file two claims practically back to back is highly unusual. If it stopped being unusual (say, if unscrupulous individuals realized you could do that without consequences), the ripple effects would spread through the system.
Insurance companies raise the cost of premiums when they have to make more payouts than they anticipated. Maybe that wouldn’t happen right away, but eventually, they always increase prices to cover their unexpected losses.
Don’t File Small Claims on Your Insurance
So what can you do to ensure that your insurance premiums don’t go up? First of all, you should be happy if your insurance company is denying frivolous claims or dropping its coverage of less-desirable customers. That ultimately keeps prices low for those of us who rarely or never have to file a claim.
Most insurance is a safety net against catastrophic bad luck. And that’s the only time you should use it. If you can self-insure yourself against having to make small claims, that’s the way to go. Save your insurance for when you really need it.
For example: What’s the first thing you do when you have a fender-bender? Most people reach for the phone and call their car insurance companies. But, you may be better off self-insuring in the case of a single-car accident with no injuries. The same may also be true for small renter’s insurance claims, which may be better to self-insure.
For your own single-car accidents, you should seriously consider getting an estimate from an auto body shop to have the damage repaired out of pocket instead of filing an insurance claim. Many can give you a free written estimate on your first visit.
You also have to consider your deductible. (On our cars, it’s $500.) Even if the cost to repair the damage is a little more than that, it could be worth it to simply pay out-of-pocket. Otherwise, if you file a claim and get paid, you could see your insurance premiums go up or even have the policy canceled altogether.
But if another person is involved in your car accident, you should call your car insurance company. If you don’t make a police report and file a claim with your insurance company, the other party could still sue you later for injuries. And your insurance company may refuse to cover a bodily injury claim against you if you didn’t notify them of the accident in a timely manner.
Have an Emergency Fund to Protect Yourself and Keep Your Premiums Low
An emergency fund can help protect you from having to file small claims against your insurance policy. These funds are no longer simply to protect you against a job loss, a broken-down car, or an unforeseen expense. You should also think of your emergency fund as a cushion that can provide you with a stopgap for small losses from accidents or theft.
While no one wants to pay for damages or replace stolen items out-of-pocket, filing a claim might not be the best route either. Your insurance should protect you from the major losses, not the little ones.
MetLife Inc. (MET), parent of the Metropolitan Life Insurance Co., makes money by collecting premia from you every month, cutting checks to your family if they outlive you, and pocketing the difference. It’s nothing novel, but that difference was $6.2 billion last year, doubling profits from the previous year and reinforcing MetLife’s position as one of the most respected companies on Wall Street. (For more, see: World’s Top 10 Insurance Companies.)
For decades, respect was taken for granted among America’s grey-flannel financial firms. But add a speculative bubble here, a housing crisis there and a Treasury Department bent on rewarding failure with other people’s money, and all of a sudden investment bankers and stockbrokers became a little more circumspect. Unlike many of its cohorts, MetLife emerged from the crisis with its reputation and its business unscathed. It took not a dollar of public funds, and if anything, the recession helped the company, leading to double-digit increases in sales. That was mostly thanks to customers looking to find an insurer that competes on price. In a recessionary environment, low-margin vendors flourish. Today MetLife is the largest life insurer in the United States. (For more, see: The 2007-08 Financial Crisis in Review.)
Not only did MetLife not take taxpayer money, the firm sued when the Treasury Department attempted to place it among the official “Too Big to Fail” firms: formally, the Financial Stability Oversight Council’s list of Systemically Important Financial Institutions. Being on the list means being subject to greater federal oversight, something MetLife’s CEO argues will harm competition and drive up costs. (For more, see: Credit Crisis Tutorial.)
MetLife is far more than your neighborhood discount risk transfer chain. What distinguishes the company from its many competitors is its international bent. MetLife’s business is divided into six categories. Three of them designated geographically (Latin America, Asia and Europe, the Middle East and Africa) and the others, the North American ones, by market segment (retail, corporate benefit funding and group, voluntary and worksite benefits.) MetLife’s minor businesses include a small mortgage concern. (For more, see: MetLife Keeps on Keeping on.)
Retail operations run from the ordinary day-to-day stuff like dental and vision to various classes of conservative investments such as annuities and retirement plans. Tellingly, the company expects this to be its fastest-growing domestic segment. As for retail, it’s easily the most profitable part of MetLife’s business. The segment’s operating earnings were more than $2.6 billion last year, that on a total of $6.7 billion. Again, the insurance industry’s bread-and-butter is the quotidian agency work that provides solid cash flow, sold one policy at a time. The last two years, retail has represented a consistent 39-40% of all MetLife profits. (For more, see: The Essentials of Corporate Cash Flow.)
Bouncing Back from a Hit
Regarding group, voluntary and worksite benefits, “voluntary” just means plans offered to businesses, but paid for fully by the employee. They can include any of the standard types of insurance, e.g. disability, life, health. This is the segment that got hit the hardest, relative to its size, by Superstorm Sandy in 2012. The disaster ended up costing the segment $41 million, a hole that took most of a year for the firm to dig out of. (For more, see: How Much Will Hurricane Sandy Cost Insurance Companies?)
Corporate benefit funding is MetLife’s second largest segment, and a distant second at that. It brought in $1.5 billion last year, or 22% of the total. Translated out of insurance jargon, corporate benefit funding means pension closeouts, structured settlements and so on. The segment took in $2.8 billion in premia last year. (For more, see: How AIG Makes its Money.)
Big in Japan, Too
MetLife’s Asian business is concentrated almost entirely in Japan, and focuses mostly on life policies and annuities. Among MetLife’s non-American concerns, Asia is the largest. In fact it’s larger than the remainder of the world, earning the firm $1.2 billion last year. Much of the gain in operating earnings is attributable to unprecedented derivative gains, which MetLife uses to hedge interest rate and foreign exchange risk. (For more, see: How Companies Use Derivatives to Hedge Risk.)
Latin American operations earned the company $682 million in 2014. Revenues have increased steadily if arithmetically, from $4.6 billion to $5.1 billion to $5.6 billion over the last three years. Every marginal dollar of revenue is worth about 40¢ in profit, a ratio that most businesses would quickly accept. The largest share of the recent increase in revenue south of the Rio Grande is due to fees for MetLife’s universal life insurance policies. And if one of the fundamental laws of personal finance is to look at each transaction from the other party’s perspective, potential policyholders should know that universal life brings in far more money on a per-unit basis than do traditional term policies. (For more, see: MetLife Seems Seriously Underestimated.)
MetLife’s Europe, Middle East and Africa business earned $362 million last year, which was a 10% increase despite revenues remaining almost unchanged. In 2014 MetLife ceased selling fixed annuities in the United Kingdom, but more than made up the difference by ramping up business in Russia, Egypt Poland, and various Persian Gulf states.
As clients enter retirement, their entire financial planning picture shifts. People go from needing to accumulate assets to needing to understand how to best spend the money they spent decades carefully saving. They need to understand how to make investments last through this phase of life and ensure all their assets are well protected.
Protecting Property and Material Assets
Retirees need to continue protecting their material assets like homes and cars. In fact, this coverage may need to increase in retirement if much of a retiree’s wealth is held in the real estate they own. If anything were to happen to the property that wasn’t covered by the right insurance, it could be difficult to financially recover from the loss without income from a job. (For more, see: Advisors: Tips for Providing for Older Clients.)
In addition to the right property and homeowner’s insurance, retirees might want to consider an umbrella insurance policy. Mary Beth Storjohann, a financial planner and founder of Workable Wealth, explains that umbrella insurance offers additional liability insurance to existing policies. “Umbrella insurance steps in to cover the difference in all your policies to protect your net worth,” she says. “It will cover property damage, bodily injury claims and legal costs. Typically, policies will start at $1 million in coverage for around $200 a year.”
Health Insurance More Important than Ever
Protecting financial and material assets is important. But so is protecting the asset of good health. “The most over-looked and most used insurance in retirement is health insurance,” says Jamie Block, a financial planner at Wealth Design Services. This becomes even more important to address if someone wants to retire early. “It’s important to analyze all the costs of health care, not just the insurance premiums,” explains Block. “These costs include deductibles, co-pays for services and prescriptions.” She also suggests paying attention to the out-of-pocket maximum, and advises clients keep at least that much in an emergency fund. (For more, see: Advising FAs: Explaining Long-term Care Insurance to Clients.)
Some retirees should consider other types of insurance that would cover costs related to health issues. “Long-term care insurance is another insurance that has a high utilization rate, which partly explains why the premiums keep increasing,” says Block. “Advisors need to determine if the cost of the policy is worth the benefits that are being paid.” In helping retirees plan, she suggests considering whether they should self-fund and if they can afford the premiums on insurance or if Medicaid would present a better alternative. “Besides the cost of the insurance, there are many non-financial reasons to get these policies,” Block explains. “The main reason is to fund extra care and be less of a burden on family members. Also, if you have the insurance, you are more likely to get the help earlier than without.”
Do Retirees Need Life Insurance?
“The retiree’s specific situation helps to dictate what type of insurance to own,” says Alex Yeager of Everlong Financial, a fee-only registered investment advisor (RIA). “For an estate planning purpose, permanent insurance like whole life may be appropriate since the client may always be facing an estate tax issue,” he explains. “For a retiree with a mortgage, term insurance may be appropriate and set to last until the mortgage is paid off.” (For more, see: Estate Planning Tips for Financial Advisors.)
Yeager says life insurance makes sense for retirees in other situations as well. “If a retiree passes away and the couple was relying on both of their Social Security incomes for living needs, a life insurance policy may be needed. At death, the living spouse will either receive their Social Security benefit or their spouses, whichever is higher. This means that a portion of the couples Social Security benefits will be lost.” He also says retirees with serious health issues that put a retirement portfolio at risk should consider life insurance to replace lost funds for a surviving spouse or dependent.
However, there are certainly cases where clients don’t need this kind of coverage in addition to the other policies they hold. “If the purpose of insurance is to replace income or fund a goal if you are not here, then some retirees don’t need any insurance,” says Pamela Horack of Pathfinder Planning. “There are three things to consider,” she advises. They are: enough regular income for a spouse, enough savings to cover healthcare concerns, and enough funds to cover final expenses. “Self-funding in this manner can allow [clients] to drop life insurance,” she adds.
The number and different types of life insurance can cause much confusion to the new life insurance agent and in some cases to the life insurance buyer.
Each life insurance policy type is designed to fit particular needs. People and businesses have different needs for coverage.
You will get a brief overview here of most types of life insurance and how each one can be applied to your particular needs.
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- Decreasing Term Life Insurance Policy
One policy that sets itself apart from all other types of life insurance policies is decreasing term life insurance. As the name implies the face amount of the policy gradually decreases over the years.
The most common area where your need for life insurance decreases is when a policy is used to erase a mortgage debt when the homeowner dies. This policy perfectly fits that type of situation. The premium remains level for the duration.
All other life insurance policies are level death benefit policies but each of them have unique twists that policy buyers may find useful.
- Yearly Renewable Term Policy
This type of policy has a level death benefit as mentioned before, however, the premium increases every year if you choose to keep the policy. Here you have a one year term policy with the option of renewing it every year.
Because you are older you pay the premium for the older age. This is life insurance in it’s purest form. You would use this to pay off outstanding debt in the event of your death.
- 5 Year And 10 Year Term Policies
These types of life insurance policies maintain a level death benefit for 5 or 10 years…depending on which policy you choose. These policies are also used to take care of fairly short term life insurance needs. You will find these level premiums to be quite inexpensive.
- 15 Year, 20 Year, 25 Year And 30 Year Term Policies
A greater number of these types of life insurance policies that we are about to discuss are sold than any other. These are level premium term policies designed to take care of long term life insurance needs. Your choice would depend on how many years you need to be covered…
Let us assume you are using this policy for family protection. You have a child 3 or 4 years old. You need to be assured that the child and surviving parent can attain all desired goals in the event of the death of the insured.
Because you want to provide sufficient cash or income at least until the child graduates college a 20 or a 25 year term policy would fit the bill. Had the child been older you could use the 15 year term policy.
- Whole Life, Universal Life, Variable Universal Life And Variable Life Policies
The premiums for these types of policies are much higher than those of the term policies…but they can fulfill an important need. If you have a desire to accumulate some cash through your life insurance policy these are the policies designed for that.
You can use the whole life policy and the universal life policies as vehicles through which you can save money. The returns are not very high on these types of life insurance policies though…
You have a better chance getting a high return on your money if you invested in a variable universal life insurance policy or a variable life policy. These types of life insurance policies are sold by prospectus only and the agent needs an N.A.S.D license before he can discus them with you.
Future Generali is a joint venture between the India based Future Group and the Italy based Generali Group. Generali Group ranks among the top three insurance groups across Europe and is the 30th largest company in the Fortune 500 international ranking.
The ratings assigned by the international rating agencies include:
A.M. BEST →A+
Standard & Poor’s →AA
Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of India’s leading business houses with multiple businesses spanning across the consumption space. While retail forms the core business activity of Future Group, group subsidiaries are present in consumer finance, capital, insurance, leisure and entertainment, brand development, retail real estate development, retail media and logistics.
Led by its flagship enterprise, Pantaloon Retail, the group operates over 12 million square feet of retail space in 71 cities and towns and 65 rural locations across India. Headquartered in Mumbai (Bombay), Pantaloon Retail employs around 30,000 people and is listed on the Indian stock exchanges. The company follows a multi-format retail strategy that captures almost the entire consumption basket of Indian customers. In the lifestyle segment, the group operates Pantaloons, a fashion retail chain and Central, a chain of seamless malls. In the value segment, its marquee brand, Big Bazaar is a hypermarket format that combines the look, touch and feel of Indian bazaars with the choice and convenience of modern retail.
The group’s specialty retail formats include sportswear retailer, Planet Sports, electronics retailer, eZone, home improvement chain, Home Town and rural retail chain, Aadhaar, among others. It also operates popular shopping portal, www.futurebazaar.com.
Future Capital Holdings, the group’s financial arm, provides investment advisory to assets worth over $1 billion that are being invested in consumer brands and companies, real estate, hotels and logistics. It also operates a consumer finance arm with branches in 150 locations.
Other group companies include, Future Generali, the group’s insurance venture in partnership with Italy’s Generali Group, Future Brands, a brand development and IPR company, Future Logistics, providing logistics and distribution solutions to group companies and business partners and Future Media, a retail media initiative.
The group’s presence in Leisure & Entertainment segment is led through, Mumbai-based listed company Galaxy Entertainment Limited. Galaxy leading leisure chains, Sports Bar and Bowling Co. and family entertainment centres, F123. Through its partner company, Blue Foods the group operates around 100 restaurants and food courts through brands like Bombay Blues, Spaghetti Kitchen, Noodle Bar, The Spoon, Copper Chimney and Gelato.
Future Group’s joint venture partners include, US-based stationery products retailers, Staples and Middle East-based Axiom Communications. Future Group believes in developing strong insights on Indian consumers and building businesses based on Indian ideas, as espoused in the group’s core value of ‘Indianness.’ The group’s corporate credo is, ‘Rewrite rules, Retain values.’
The Generali Group
The Generali Group is a leading player in the global insurance and financial markets. Established in Trieste in 1831, today the Group is one of Europe’s largest insurance providers and the European biggest Life insurer. It is also one of the world’s top asset managers with assets totaling more than € 300 billion. With an employed sales force of more than 100,000 people serving 60 million clients in 65 countries, the Group occupies a leadership position in Western Europe and an increasingly important place in Eastern Europe and Asia.
The Group strategy aims to consolidate Generali’s pre-eminence on its key markets and achieve a premier position on markets with high growth potential, establishing its leadership in profitability. The Group is not only the market leader in Italy, but also a primary player in Germany, France, Austria, Spain, Switzerland, Israel and Argentina. Generali is a strong player on markets offering high growth potential. In Central Eastern Europe, in particular, thanks to the Generali PPF Joint Venture, it is one of the primary players. Generali also has Joint Ventures in India and China, where, within a few years after its entrance, it has already become one of the top foreign insurance providers.
The worst nightmare that anyone can have is when a family member is hospitalized without health insurance coverage. Here is an example…
‘A noteworthy businessmen Mr.Rao always dreamt big. Small and minor achievements seldom quenched his thirst for accomplishing big things in life. Over the years he proved his merit and escalated new heights of success. Coveted awards and accolades flooded him. As a shrewd businessman he was planning for health insurance before the formidable tax month of March. The decision was postponed by a month due to several reasons. Rao was busy with his commitments and the insurance advisor who contacted him was also busy with his clients.
The dreaded day
On a sunny morning as Rao was driving towards his office a lorry driven by a drunken driver crashed on his vehicle and he rammed against a wall of a house and lost consciousness…Today Rao is not able to use his hands and legs effectively and within a year his financial position dwindled due to mounting hospital expenses and continued absence from business. None of the insurance companies are ready to give him a health policy at this stage.’
We live in the world of uncertainty. Sometimes a seemingly small ailment can turn into a major one. In a moment life can come to a grinding halt if you are involved in a major road traffic accident. And the situation is worse when the earning member of your family is hospitalized! But with a health policy you and your family can be rest assured and have some security!
Poor quality of service is rendered to the citizen by government hospitals while private medicare has become exorbitantly expensive; it is mandatory for a middle class person to seriously consider the option of health insurance.
A major surgical operation of the heart may cost anywhere between two to three lakhs today. Not many individuals can afford to spend out this amount in a short and sudden situation. Even if they have insurance that is reimbursable under their Mediclaim plans the strain on the family can be immense. The option of cashless hospitalization becomes attractive under these circumstances.
The entry of private players has stirred fierce competition, ultimately benefiting the consumer thereby heralding a new era in health insurance. The advent of foreign and private players into the life and general insurance sector has directly resulted in the huge development of insurance market including significant increase in medi-claim insurance. With the Indian middle-class population almost similar to the total population of United States, India looks attractive for business opportunities to international players in this field.
This is the ideal time to look at the health insurance market and make the best of what is available.
The insurance business professionals strongly say that the limitless medical insurance market has not been fully tapped so far due to lack of awareness among the public about the importance of health insurance and also due to the lack of rightly targeted policies from the companies. An appropriate policy has the potential to rope in more than 2 million customers.
Term life insurance is easy to understand. When you buy a term life policy, you are buying a promise from an insurance company that it will pay your beneficiaries a set amount if you die during the policy’s term. In exchange, you pay a monthly premium to the company for the duration of that term.
Looking for a quote? Use the form at the top of the page to compare today’s top insurance companies.
Touted for its “pure life insurance protection,” term life insurance includes none of the cash-value features found in whole life policies. Because of its low cost relative to other types of life insurance, term life continues to be the most popular life insurance choice.
Generally, you purchase life insurance to replace your income if you die, so your loved ones can pay debts and living costs. For example, if you and your spouse own a home and you were to die tomorrow, your spouse would have to pay the mortgage on his or her own. If you had the proper term life insurance policy, your spouse would receive enough money from the policy’s death benefit to pay off the mortgage.
Term insurance doesn’t just cover specific debts, however. If you have children, term insurance can provide money for college and living expenses if you die before your children are fully grown.
If you outlive your policy term, the insurance terminates and you must buy another policy if you still want to carry life insurance. However, the annual premium for another policy could be quite expensive because your older age and any health conditions will be taken into account. That’s why it’s important to choose a suitable term length early in life.
Compared to other types of life insurance, shopping for term life is simple. The necessary steps include:
- Choosing a life insurance company. Insure.com maintains a list of the best life insurance companies based on customer reviews.
- Choosing the length of the policy. Common terms include 10, 15, 20 and 30 years.
- Choosing the amount of the policy. This is the sum your beneficiaries will receive in the event of your death. The amount you choose should depend on a number of factors, including your income, debts and the number of people who depend on you financially. Many policies amounts range from $100,000 to $250,000, but higher and lower amounts are also common.
Once your policy is in place, maintaining it is a matter of paying your monthly premiums. From there, if you die while the policy is in force, your beneficiaries receive the face amount of the policy tax-free.
Medical exams for term life insurance
When you apply for term life coverage, you’ll be asked a large set of questions about your personal health history and family health insurance. The insurance company will also probably require a medical exam. Don’t be surprised if you’re asked the same set of questions more than once – first by your agent, and then by the paramedical professional who conducts the exam.
The exam typically covers your height, weight, blood pressure, medical history, and blood and urine testing. With the blood and urine tests, the insurer looks for specific medical problems and the presence of nicotine. Positive results could affect your premium, or even your ability to buy a policy.
Nicotine users will pay more for life insurance, although occasional cigar smokers may be able to get less expensive premiums. You don’t have to be a smoker to get what used to be called “smoker” rates. Anything that delivers nicotine into your system, from nicotine patches to e-cigarettes, will garner you higher life insurance rates.
Marijuana users also must disclose their drug use, but those that fail to mention this will likely be caught anyway by the medical exam.
Types of term life insurance
The calculations behind life insurance rates are all about life expectancy. That’s why life insurance costs more as you get older. You can lock in low premiums by buying a “level premium” policy. That means for the policy’s time period, say 20 years, your premium stays the same. Many term life policies give you the option to renew your coverage at the end of the term without undergoing another medical exam, although your premiums will rise annually after the level term period – often substantially.
A less popular type of policy is “annual renewable term.” This gives you coverage for one year with the option of renewing it each year for a specified duration, such as 20 years. With this policy, your rates go up every year you renew and are calculated based on the probability of your dying within the next year.
If you’d like to have term life insurance protection in place to provide for beneficiaries but you’re confident you’ll outlive the policy, you could consider “return of premium” term life insurance. Under this type of policy, if no death benefit has been paid by the end of your insurance term, you receive all your premiums back. It pays to shop around for a policy like this, but on the low end you can expect to pay 50 percent more in premiums than comparable traditional term life insurance.
If you have trouble finding life insurance because of illness or a troubled medical history, you can turn to a simplified issue term life insurance or “guaranteed issue” policy. These policies require only a few questions and no medical exam, but you pay a much higher premium in exchange for the guaranteed coverage. That’s because the insurance company takes on more risk by insuring people without knowing their medical conditions. Guaranteed issue policies often have “graded” benefits that pay only a partial benefit if you die within the first several years of the policy. A life insurance agent can search the marketplace for a guaranteed issue policy that meets your needs, but even if you have a spotty medical history, an underwritten policy like term life still could be less expensive.
If you don’t like answering a lot of questions and you want a small policy just to pay for your funeral, you might consider final expense insurance. This coverage typically pays a lower benefit than conventional term life insurance. You cannot be turned down for this type of policy, but here again you’ll pay more for that convenience.
How much term life insurance costs
According to trade group LIMRA and the LIFE Foundation, the average cost of a 20-year, $250,000 term life policy for a healthy 30-year-old is about $160 a year. That comes to less than $14 per month.
The price of your policy will vary depending on your age and other risk factors, but you should never assume that a policy is out of reach because of cost. Eighty percent of consumers misjudge the cost of term life insurance, according to LIMRA. This is especially true of members of Generation X, who overestimate the cost by 119 percent, and millennials, who overestimate the cost by 213 percent.
Choosing the right term life policy
Figuring out which term you should buy – 10 years, 20 years, 30 years or some other number – requires a review of your debts, financial needs, dependents’ needs – and when all those responsibilities might change. When will your dependents reach financial independence? What are your major debts, such as mortgages or other loans, and when must they be paid off?
It’s a good idea to review your life insurance needs carefully, both when you buy a policy and when you experience a major life change. To stay on top of your life insurance needs, you should:
- Watch your circumstances. Review your situation yearly to make sure your term life policy still provides appropriate coverage.
- Shop around. Life insurance quotes vary considerably among insurers, so do your homework.
- Sweat the fine print. An insurance policy is a legal document, so read it carefully and make sure that you understand it before signing anything.
- Be truthful. Answer all application questions accurately. Insurance fraud is a serious crime and companies treat it as such.
- Maintain your list of beneficiaries. Don’t wait to change them when it’s necessary. And tell your beneficiaries about the insurance – don’t pay for a policy that your heirs can never claim because they don’t know about the policy or the name of the insurer.
Choosing the right term life policy requires a small investment of time, but the benefits can be priceless. The first reason for this is obvious: The right policy will help care for your beneficiaries in case you die. But the second reason, which will benefit you even if you outlive your policy, is the peace of mind that comes with knowing that you and your loved ones are covered.
There’s a lot to take into account when buying a new vehicle. How it feels and looks is important, but how much it costs — including fuel consumption, potential resale value, and monthly auto insurance premium — is usually the deal breaker. To help buyers determine which cars are truly the cheapest, Cheapism.com turned to a recent comparison of insurance rates for more than 1,500 vehicles by Insure.com.
This list of the 15 cheapest cars to insure reflects the annual cost of full coverage by six major insurers for a 40-year-old male driver with good credit, a clean record and a 12-mile commute in 10 ZIP codes in each state. Unsurprisingly, family vehicles that are typically driven by cautious parents are cheaper to insure than flashy sports cars, but other affordable models may not be what you expect.
Jeep Wrangler Sport: $1,134 a Year. The least expensive standard model Wrangler on the market, this two-door, 4×4 SUV is notable for its 3.6-liter Pentastar V6 engine and iconic looks. This model also recently ranked first in terms of resale value for compact SUVs. (It retains 57.4 percent of its original list price of $23,500 after five years.)
Jeep Patriot Sport (2WD): $1,136 a Year. Cheaper (starting at $16,895) and roomier than a Wrangler, the two-wheel-drive Jeep Patriot is better suited for family driving than off-roading. Cruise control and 16-inch wheels are standard, but the Sport package lacks power accessories and air conditioning. Car site Edmunds.com asserts there are better options for consumers than the Patriot, citing drawbacks such as insufficient storage space, disappointing ride quality, and lackluster basic options.
Honda CR-V LX (AWD): $1,160 a Year. The LX is the simplest of the available trim packages but still comes with a rearview camera and hands-free text messaging. All CR-V models are powered by a 2.4-liter, four-cylinder engine, although the all-wheel drive included in this model is an upgrade. The CR-V ranked best in a U.S. News & World Report list of affordable compact SUVs and starts at $24,695. The review highlights a spacious interior, responsive steering, and good fuel economy.
Dodge Grand Caravan SE Plus: $1,162 a Year. The top-ranking minivan on the list, the Dodge Grand Caravan carries a mixed reputation but offers some features consumers may like. The second and third rows of seats can be laid flush with the floor, creating plenty of cargo space and the rear seats can be flipped to face the back for tailgating. The SE Plus starts at $25,245; the cheapest trim package, the AVP, starts at $21,795. This is the last year the Caravan will be available; Dodge is dropping it from the lineup.
Honda Odyssey LX: $1,163 a Year. The Honda Odyssey minivan is a favorite among car critics, although at $28,975, it’s more expensive than others on this list. Still, it’s noteworthy for its smooth handling, quiet and comfortable ride, safety rating, and fuel efficiency (for its class). The LX is the base model but still includes a rearview camera, Bluetooth, Pandora compatibility and power-adjustable front seats.
Jeep Compass Sport (2WD): $1,164 a Year. This third Jeep model on the list, like the Patriot Sport, is less expensive than a Wrangler, at $18,995. It’s also less Jeep-like, in that off-roading may just be off-limits for this front-wheel-drive model. That doesn’t mean it’s not a good compact SUV, though; it gets decent reviews from experts at Edmunds and The Car Connection, a review and research site.
Subaru Outback 2.5i: $1,176 a Year. The 2015 Outback has been redesigned and offers a roomy interior, sleek body and precise steering. All Outbacks come standard with all-wheel drive, making this a suitable vehicle for outdoor adventures. Motor Trend concludes that the 2015 Outback is bigger and handles better than the competition. The 2.5i is the base model and starts at $24,895.
Ford Edge SE (2WD): $1,176 a Year. A mid-size crossover that seats five, the Ford Edge SE is comparable to the Honda CR-V LX, according to The Car Connection, (although this model has front-wheel drive). Other reviewers appreciate the high-quality look and feel, EcoBoost engine and quiet ride. This base model has a list price of $28,100.
Smart Fortwo Pure: $1,186 a Year. The Smart Fortwo is a two-seater car about half the size of a sedan, which makes finding a parking space amazingly easy. But the same $13,270 and up that you’ll spend for this model can buy a more comfortable ride that isn’t scary to drive on a freeway. The Pure package is bare-bones, although there are options for power windows and mirrors ($80), radio ($350) and power steering ($550). Air conditioning comes standard.
Ford Escape S (2WD): $1,190 a Year. One of the best-selling crossovers on the market, the Escape stands out with its styling and acute handling. Reviewers say it’s fun to drive on winding roads, although it can feel a bit firm at times. Even the basic S trim level (starting at $22,960) comes with full power accessories, six-speaker sound system, air conditioning, rearview camera and Ford’s Sync voice command system.
Nissan Xterra X (2WD): $1,200 a Year. Based on a shared Frontier pickup platform, the Nissan Xterra (starting at $23,660) boasts the same easy-to-clean interior. The Car Connection notes that owners give up some comforts (those easy-to-clean surfaces are hard plastic) but get a vehicle that’s versatile, spacious, and ready for off-roading.
Dodge Journey AVP: $1,201 a Year. The American Value Package, the base model, starts at $20,295 and is a good budget option for consumers seeking a midsize crossover. The Journey AVP seats five, but an optional third row adds an additional two seats. The four-cylinder engine can feel strained, but it’s the only option available at this trim level.
Buick Encore: $1,205 a Year. The Buick Encore, a subcompact crossover, is slightly larger than a standard hatchback and feels more luxurious than the competing Honda HR-V, Mazda CX-3 and Jeep Renegade, but there’s no need to pay for a luxury marque. The Encore is available for $24,065 and up. There are five seats, but in reality it fits only four adults comfortably. Reviewers also say the 1.4-liter engine doesn’t have enough oomph, or the fuel efficiency one might expect from a small-engine subcompact; they like just about everything else.
Chevrolet Spark LS (Manual): $1,206 a Year. The Chevy Spark is a four-door hatchback that works well for city drivers and is kind to the pocketbook: This model’s MSRP is just $12,270. Despite being small and light, the Spark feels and drives like a “real car,” Edmunds says. This practical car seats four and gets up to 40 mpg. The basic LS trim comes with air conditioning, power windows and a four-speaker sound system.
Toyota Tacoma Access Cab (2WD): $1,210 a Year. The only pickup on this list is a leader in the compact/midsize class. The Tacoma isn’t as powerful nor as comfortable as a full-size but is known for durability and does well when stacked against the competition. The basic, two-door Access Cab version comes with a 2.7-liter, four-cylinder engine, air conditioning, manual transmission and two rear seats that are best suited for children. It’s an easy pickup to drive, but with a starting price of $20,965, it’s more expensive than comparable models.
These days people are worried about getting a health insurance plan for pre-existing conditions. They are under the impression that if they are suffering from a pre-existing condition like diabetes or heart disease, then the insurance company will not cover them. But this is not true.
We have heard of incidents where people are denied a policy or their cover is so limited that the benefits under their plan are simply not worth the price. It is as if one has to look through one exclusion after another to find that elusive benefit.
The secret to getting health insurance for pre-existing medical conditions lies in doing a thorough research. Today there are a large number of insurance companies to choose from and there is a big difference in attitudes as to what they will and will not cover.
There are many insurance companies who are ready to take the risk of covering you but they will impose conditions. For example, they may cover your condition but will require you to pay an additional premium. Alternatively, they may say that your pre-existing condition will be covered after a waiting period provided you have not required treatment for that condition during this period. These are just two examples of insurance companies providing cover as long as certain conditions are met.
Group health insurance plan is another approach that you can consider. In many cases, group policies provided by the employer, will accept employees regardless of pre-existing medical conditions. Many times we think that group policies are available only through employment, but there are many cases where you may be eligible to join a group health insurance plan. For example, if you belong to a professional association, then you may be eligible to join a group medical insurance plan.
Don’t let a pre-existing condition stand in your way of getting a health insurance cover. Collect the necessary information, get some quotes and you’ll be surprised how easy it is to get a cover to cover your pre existing conditions.
Definition of a ‘Pre-existing Medical Condition’
This is a difficult question to answer as different insurance companies interpret this phrase in different ways. State law will often prescribe conditions which may and may not be included under this heading. Heart disease and diabetes are generally taken to be classed as pre-existing but others are less clear.
Pre-existing condition relates to a medical issue which was present prior to a person obtaining a health insurance policy. There are often negative connotations associated with the term pre-existing condition as it is something that prevents you from obtaining an insurance coverage or which will make you pay a higher premium when you obtain cover. Many who want coverage and have a pre-existing condition will feel happy to know that there are insurers who will provide them with the same, subject to restrictions.
Tired of paying too much for your car insurance? If so, you’re not alone.
According to J.D. Power, car owners got hit with average increases of 35 percent — $153 — on their car insurance premiums last year. And that was up from an increase of $113 in 2012.
As rates reach for the sky, more car owners are reaching out for options to control their costs. And according to consumer financial website NerdWallet, one option you should look hard at this year is usage-based, or “pay-as-you-go” car insurance.
The 411 on Usage-Based Insurance
Usage-based insurance is a relatively recent innovation. The National Association of Insurance Commissioners describes it as a way to align the premiums that drivers pay with the amount and manner they drive, “making premium pricing more individualized and precise.”
The basic idea is that the less you drive, the less chance your car will be damaged while driving — and so the less you should pay to insure against the risk of such damage. Similarly, the better you drive — e.g., by driving “gently,” obeying the speed limit, and neither accelerating nor braking too precipitously — the less you should be charged.
The question is how to prove to an insurance company that you drive little enough, and well enough, to deserve a discount. And the answer to this question is telematics.
Big Insurer is Watching You
Telematics refers to new advances in technology that permit an insurer to monitor how a driver drives. It basically boils down to you, the driver, permitting your insurer to install a GPS monitoring device in your car that records how the vehicle is driven over a period of time.
GPS technology has the ability to track both how far a car travels over time and how fast the it’s being driven. By comparing these two data points, GPS telematics can also tell how quickly a driver accelerates and brakes.
All of this can give an insurer a good picture of how aggressively or carefully the car is being driven, allowing the insurer to better calibrate how “risky” it is to insure the driver.
What’s in It for You?
NAIC thinks that within the next five years, enough insurers will offer telematics to have 20 percent of cars on American highways covered under usage-based insurance plans. But why would you want to participate?
To be blunt, if you’re a bad driver with a lead foot and a need for speed, you probably won’t want to have anything to do with telematics. But for good drivers, it could be a great way to reduce the cost of car insurance.
FC Business Intelligence, which runs an informational website on telematics, estimates that good drivers buying insurance from Progressive (PGR), for example, can save as much as 30 percent by installing the company’s Snapshot telematics device in their cars, and providing data to Progressive on the number of miles they drive, how often they drive late at night, and similar information. Progressive provides the Snapshot device free to policyholders.
Drivers insured by State Farm could save even more. The Telematics Update website suggests that discounts based on the driver (age, occupation and place of residence) and data from the company’s Drive Safe & Save telematics program can add up to as much as 50 percent off base insurance rates.
Mind the Fine Print
Not all usage-based insurance programs are created equal, so pay attention to the details before signing up.
State Farm, for example, offers its UBI program in partnership with General Motors’ (GM) OnStar service, and with Ford’s (F) Sync. But if you don’t subscribe to either, you’ll need to subscribe to a third service, called “In-Drive” — and pay a $7 monthly fee for use of its telematics device. The first year of the service is free — but after that first year, fees could eat into any savings on your insurance premium.
That is, assuming you drive gently enough to receive any savings at all.
Motley Fool contributing writer Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Ford, General Motors, and Progressive. The Motley Fool owns shares of Ford.
Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual insurance plan that exclusively covers healthcare costs and is called Health Insurance.
Since the past two decades, there has been a phenomenal surge in acceleration of healthcare costs. This has compelled individuals to have a re-look on their actual monthly expenditures, spending patterns and simultaneously allocate a proportion of their income towards personal healthcare. This has resulted in individuals availing healthcare insurance coverage not only for themselves but also for their family members including their dependants. In short, healthcare insurance provides a cushion against medical emergencies. The concept of insurance is closely concerned with security. Insurance acts as a shield against risks and unforeseen circumstances. In general, by and large, Indians are traditionally risk-averse rather than risk lovers by nature.
Some major health insurance companies in India include National Insurance Company, New India Assurance, United India Insurance, ICICI Lombard, Tata AIG, Royal Sundaram, Star Allied Health Insurance, Cholamandalam DBS, Bajaj Allianz Apollo, AG Health Insurance Company among others.
Indian Health Insurance is primarily classified into 2 categories:
• Cashless Hospitalization
• Medical Reimbursement
a) Cashless Hospitalization
Cashless hospitalization is a specialized service provided by an insurer wherein an individual is not required to pay the hospitalization expenses at the time of discharge from the concerned hospital. The settlement is done directly by the insurance company (or insurer). However, prior approval is a must from the TPA (Third Party Administrator) before availing the benefits under this option.
Cashless hospitalization can be of two types:
• Planned hospitalization: This is a planned hospitalization wherein the insured is aware of the hospitalization in advance. This duration period may vary from case to case. Examples include: FTND (Full Term Normal Delivery), Chemotherapy treatment for carcinoma (cancer), for cataract surgery, tonsillectomy (removal of tonsils).
• Emergency hospitalization: It is a sudden hospitalization that may be either an emergency or due to unforeseen circumstances. In short, hospitalization is not anticipated in advance. Examples include RTA (Road Traffic Accident), Myocardial infarction (heart attack), Acute Appendicitis.
b) Medical Reimbursement
Re-imbursement means to repay or to compensate. Thus, Medical Re-imbursement means to repay the products/services availed during hospitalization and more importantly after the completion of the treatment.
Under this procedure, the insured has to bear the entire expenses incurred during hospitalization. After getting discharged from hospital, the insured/policy holder can claim medical reimbursement. For availing benefits under this option, the insured has to approach the concerned TPA under which he/she is covered, fill the requisite form and satisfy all the requirements as mentioned. This includes submission of TPA card, policy paper, discharge summary, prescriptions, diagnostic laboratory reports, OPD treatment details etc. A sum is granted as reimbursement for treatment expenses.
A recent survey conducted in 2008 showed that only 3% of the entire Indian population has availed some sort of insurance policy and enjoys benefits included under its coverage. This miniscule percentage constitutes both – PSUs (Public Sector Undertakings) and Private insurance companies. Since, the general public are by and large ignorant about the benefits of availing healthcare insurance policies, there lies an urgent need to educate the masses regarding the importance of Healthcare Insurance and the benefits derived on account of it.
There are numerous reasons for not availing health insurance. There is a lack of knowledge regarding the existing insurance products/services in the markets. On top of it, there are numerous misconceptions about Insurance prevalent in the Indian Markets. Also there are numerous fly-by-night agents out to fleece the gullible Indian public.
In India, public funded healthcare is available only to a miniscule section of BPL (Below Poverty Line) groups, low-income groups and to government employees. The Indian Government has formulated Employee State Insurance Scheme (ESIS) that focuses on the public healthcare policy for low-income groups. The government employees can avail Central Government Health Scheme (CGHS) that offers medical treatment at a subsidized cost.
With the opening up of insurance sector for private participation, numerous players have entered the healthcare segment, but inspite of the entry of private sector, penetration of insurance coverage in India is abysmally low. Recently a legislature has been passed in the Indian Parliament allowing 49% of FDI in insurance industry.
Essential Guidelines for Availing individual Health Insurance Policy:
The following points should be borne in mind while purchasing an individual health policy:
• Understanding the policy coverage: The policyholder should be able to clearly comprehend the extent of medical coverage being offered under the particular health insurance policy before opting for it. The individual should check whether pre-existing diseases and its resultant complications are covered or not, as well as the extent of the coverage under that particular policy.
• Keeping an eye for medical expenses that are not covered/re-imbursable under the policy: Before availing a particular health insurance policy, the prospective policyholder should note the medical expenses not covered under that Insurance policy. It is important to note that deductibles are a part and parcel of any insurance coverage and the expenses incurred as part of the medical treatment need to be borne by the individual. Generally this list includes aprons, sterilization charges, gloves, Dettol, gloves etc.
• To understand whether it is a co-insurance policy: Before availing a health policy, the prospective customer should understand whether it is a co-insurance policy or not. It is advisable to get an individual health insurance policy with a co-insurance payment option. The maximum amount does not exceed 15% of the entire medical coverage for a particular disease.
• Understanding and updating oneself about expiry period regarding the policy cover: An individual health insurance cover entails regular premium payments on a monthly, half yearly or annual basis before the expiry of a particular policy. Non-payment of premium within the stipulated time results in the lapsing of the policy with subsequent break in the policy coverage of the concerned individual. Even though the concerned individual holds policy with an Insurance company for many years together, a break in the policy coverage (which generally does not exceed more than 15 days) is treated as a fresh policy cover.
Importance of Health Insurance
The importance of Health Insurance can never be undervalued for the following reasons:
• Provides security to human life which is of prime importance to any individual.
• Closely bonds Insurance Companies, Hospitals, Policyholders and TPAs together for the benefit of Indian masses.
• An answer to the solution of uncertainties and risks that are prevalent and ever-pervading in human life.
• Prevention and minimization of unforeseen losses.
• Access to quality healthcare.
• Means of savings and a safe investment option.
• Provides financial stability in life.
• A tax-saving instrument that significantly contributes in reduction of tax deductions.
• Reduces tensions and stress caused on account of hospitalization.
• Greatly contributes in leading a stress-free life.
You just got a new job – congratulations – or maybe decided to retire. And you’ll be leaving your state to do so. Does the insurance you have now cross state lines when your moving truck does?
It may or it may not. But there are things you can do to make sure you keep your coverage or pick up new coverage so you can avoid any gaps. Don’t let yourself be that person who breaks a leg or gets diagnosed with cancer while uninsured, all in an attempt to save a few bucks. Health insurance is expensive. Getting caught without it can be more so.
Employer Provided Health Insurance
If you’re moving states because your employer is transferring you. then you’ll likely stay on that employer’s plan, providing it has a complete network in the new city. If it doesn’t, the employer might find you a new plan in the new city.
If You’re Leaving A Job Behind
If you’re leaving your job and moving to a new state – or even if you’re not changing states – you have the ability to extend your coverage by something known as COBRA, which is an acronym for a particular federal law. As your existing health insurance ends, you can get coverage extended another 18 to 36 months (depending on your circumstances), which could tide you over in the new state. But this only works if the insurer has a network in the new state that makes it feasible to get treatment. And you’ll face sticker shock as well: Under COBRA coverage, you pay the full cost of premiums – so you’ll suddenly be aware of how much your employer had been paying for their share of your coverage. Full details on COBRA are available here. (You may want to read What You Need To Know About COBRA.)
Insurance Shopping In Your New State
If you need to buy insurance in the new state, the Affordable Care Act made that easier. Under the 2010 health insurance law popularly known as Obamacare, you can move to a new state and become eligible to buy insurance in that new state. Moving triggers a special enrollment period so you can select a plan right away. If your state doesn’t run its own exchange, you can use the federal exchange: healthcare.gov. You may want to check out Essential Health Benefits Under The Affordable Care Act.)
Much of the uncertainty of moving to a new state has vanished with provisions of the new law.
If you move to a new state, but don’t immediately have a permanent home, you are still eligible to get insurance in your new state, as long as you intend to remain there.
Where Should A Snowbird Get Insurance?
The exchange, in most instances, will accept your statement regarding change of state residence without any verification. However, you may need to provide documentation that you have moved and intend to reside in a new state if there is some information available that suggests you may live in a different state.
Let’s say you have coverage through an ACA exchange and are a snowbird – living part of the year in one state up north and other in the winter in the south. You should buy coverage in the state where you spend most of the time, pay taxes, and officially reside. If you truly split your time in half or even in thirds, it might be worthwhile to consider plans offered by insurers that use a national provider network so that you could find participating providers in more than one state.
How To Insure The College Student Or Grown Child Under 26?
You can cover your adult children who attend college in another state under your healthcare plan. But check out if your student will be able to find medical providers in-network nearby. Some insurers have agreements with companies in other states. Otherwise, you may need to look into a separate plan.
At times you are diagnosed with a critical ailment and can involve very expensive treatment and may involve intensive care which is not covered by comprehensive insurance so you may have to pay from the pocket. A critical health plan pays a lump sum on diagnosis of severe ailments.
Why is it Important?
You receive a lump sum of money which you can use to pay for loss of income as you are unable to work, or pay debts, or for expensive treatment. On the whole it can even add to your health insurance policy.
A critical care illness cover is cheaper than an indemnity plan, for example a comprehensive insurance plan for a 30 year old individual with a sum assured of 5 lakhs will cost about Rs.6000 annually as compared to a critical illness plan which will cost Rs. 1,500 for the same.
“A comprehensive health plan covers a wide range of risks and is therefore significantly expensive than a critical illness plan that covers specific situations,” says Arvind Laddha, chief executive officer and managing director, Vantage Insurance Brokers & Risk Advisor.
A combination of comprehensive health insurance and critical illness cover can give a good balance between pricing and coverage. “A Rs 5 lakh indemnity cover along with a Rs 10-15 lakh critical illness cover should be a decent mix,” says Mukesh Kumar, head of strategic planning, HDFC ERGO.
Critical illness plans are sold by life insurance and general insurance companies. Life insurance offers policies with longer tenures – for example – ICICI’s Prudential Crisis cover has a 50 years maximum cover and ICICI Lombard’s Critical Care can be bought for 5 years.
Companies that Cover Critical Illness plans-
Each company has clauses which may vary from other companies, for example ICICI Prudential’s Crisis Cover protects against 35 illnesses, Bharti AXA’s Smart Health covers 20 of them, while Aviva’s Health Secure pays for 12 ailments. Some of these illnesses include-
• Heart Attacks
• Kidney Failure
• Major Organ Transplant
• Multiple Sclerosis
Some companies include many more illnesses
“One should evaluate and compare a few different plans to decide which suits the best. Consider the list of illnesses covered, the cover amount, the claim procedure and the payment history of the insurer,” says Suresh Sugathan, head, health administration team, Bajaj Allianz General Insurance.
Critical illness covers are fixed benefit plans. You get the entire sum insured irrespective of whether one is hospitalized or not and whatever the treatment expenses are. However, details vary from plan to plan.
The built-in coverage also differs from policy to policy. While some insure accidental death and partial or total disability due to accidents, some don’t.
A Comparison of some standalone Critical Illness Policies-
|HDFC Ergo||Critical Illness||Rs.1,405|
|ICICI Lombard||Critical Care||Rs.2,017|
|Bajaj Allianz General||Critical Illness||Rs.1,500|
|Reliance General||Critical Illness||Rs.1,538|
Points to consider before buying a Policy-
• “Age and medical history are important while deciding the appropriate sum insured,” says Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance. The sum insured should be higher for the aged as they are more likely to develop chronic ailments.
• Older people should buy larger covers as they are susceptible to various illnesses, indemnity plans are very limited at this age and have low sum insured and will come co-payments and strict terms and conditions.
• Also take into account existing covers such as Mediclaim or personal accident and disability insurance policy. Along with this keep in mind the cost of treatment, and financial losses due to income loss.
• Check family history for cardiac or any major ailments and check if the policy covers those ailments.
• You can buy a standalone critical illness policy or one with your existing health policy.
• “The advantage of a standalone critical illness plan is that it is not compulsory to renew your health or life plan if you want to keep the critical illness cover. Riders are recommended as clubbing covers can facilitate easy management,” says Gaurav Rajput, director, marketing, Aviva India.
• Critical illness plans are sold both by life Insurance Companies and general Insurance Companies, the difference being that life Insurance Companies offer longer tenures. There are some special plans offered for women and senior citizens, Bajaj Allianz offers critical illness covers for breast cancer, ovarian cancer and cervical cancer.
• Some companies give a lifelong renewability and some stop at 50 years.
• According to the survival clause, the insured must survive for a minimum of 30 days after diagnosis. The waiting period refers to a period of 3 months after inception of the policy, though this can change from policy to policy.
• When the assured tests positive for HIV/Aids he is not eligible for Critical Health cover.
• When the assured, is hurt or wounded, due to act which involves terrorist activity or with arms or ammunition.
• Sometimes some insurers put a cap on the amount that can be claimed for certain illnesses. The claims record should be looked into before you buy a policy from the insurer. It is generally 30 days after diagnosis on submission of all the relevant documents.
Things to look out forBefore Purchasing Critical Care Health Insurance Policy
• Always read the small prints of the policy. Make sure you know exactly what is covered and what is not covered.
• Check if premiums are fixed or increase every year. Fixed premiums may be slightly higher but are better in the long run. These policies offer a guaranteed premiums.
• If you have a family see if you buy such a cover for the family. Some critical care policies may start at 18 years and end at 50 or 70 years and may not cover children.
• Compare the policy offered with that of another company’s policy compare two or even three to see what key features are offered by each before you make a choice.
Look if there is cooling off period in the policy i.e if you change your mind say within 14 days of buying the policy – you are eligible for full refund of your first premium.
Many policies have a ‘survival clause’, this means that you must survive for a minimum of 30 days after diagnosis.
There maybe a waiting period before the policy becomes functional and this can be as much as three months from the start of the policy.
Sometimes some insurers put a cap on the amount that can be claimed for certain illnesses. The claims record should be looked into before you buy a policy from the insurer.
Making a claim-
The insurer pays the benefit as a one-off lump sum and this is usually tax-free.
Payments may not be immediate and can take 28 days to 6 months after a serious illness or disability is diagnosed. Disability claim usually take longer.
Remember that a critical illness insurance cover is different to Income Protection or a permanent health insurance where a regular income is provided in the event of long-term sickness or injury.
Life Insurance buying tips. If life insurance buying is approached in the proper manner it can be very beneficial to yourself and your family.
You need to take the time to give some thought to a subject that can be very unpleasant.
I guess that is why most people don’t think about it, or at best think about it only after they have had a brush with death, or when a life insurance professional brings up the subject.
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Sometimes these people wait until it is too late to do something about such a critical matter. They find themselves not insurable when they discover they have some critical illness.
People should give serious thought at least once per year as ones situation may change and you find that your need for life insurance may change as a result. One of the best life insurance buying tips is therefore to review your life insurance needs at least once per year.
These are the questions any good life insurance agent would ask. Your answers would help him or her come up with an accurate amount that would be a perfect fit for you. Here are the questions you should ask.
- Should I buy life insurance to pay for funeral expenses when I die or do I prefer to have this taken from accumulated cash?
- Do I need a policy to pay estate taxes? This is for people with an estate in excess of $1,500,000. Estate taxes may be repealed in the near future. The congress is looking at this matter at the present time.
- Do I want to leave a lump sum for my family and how much? If the beneficiaries are well practiced in handling large sums of money then this may be a good idea, otherwise, it may be wise to provide an income.
- What about an income? Should I set up an income for the lifetime of the beneficiary, or should the income derived from the proceeds of the life insurance policy be paid out for a limited number of years? Should I let the insurance company hold the principal and pay out an income to the beneficiary?
- How about life insurance on my spouse? Would that be a good thing? What about the children, is there a need for life insurance?
- If you have a business, is there an employee that you could consider akey employee? Should you have some life insurance on him or her? If your business partner died, what would happen to his shares? What would happen to his family?
These are your life insurance buying tips. Ask yourself these questions when doing your life insurance buying and you will know whether or not you need life insurance, and if you do, how much you should buy. Go ahead and buy your life insurance with these life insurance buying tips in mind.
You can insure your home and car from disasters and accidents. Life insurance essentially protects your family from the loss of your income should tragedy strike. You can’t insure your retirement accounts in the quite same way, but there are a few tried and true strategies that can safeguard them.
1. Continue Saving for Your Retirement Even During Your Golden Years
There is no rule that you have to stop investing when you hit your golden years. One of the best hedges to outliving your retirement assets is to continue investing even when you reach retirement age. While there are mandatory age distributions from 401(k) retirement plans and traditional IRAs, you can continue to make investments in other assets during your retirement.
“With increasing life expectancy and retirements that could last for decades, investing may be a necessity for many retirees, says J.J. Montanaro, a certified financial planner with USAA. “If you just look back at the last 30 years, a dollar has lost nearly 60 percent of its purchasing power to inflation. Investing offers a way to combat that loss of purchasing power. The key is to develop a plan that will allow you to achieve what you want to achieve without causing chronic insomnia.”
2. Work Longer
While some Americans must continue to work during retirement because of a lack of savings, others simply want to work and enjoy the social aspect of working during retirement.
Mitch Anthony debunks the old concepts of retirement in “The New Retirementality.” “A longer work life means continued engagement as well as continued paychecks,” he says. “The day you cash your last paycheck, the price of everything begins to matter. Why enter a shrinking economic reality sooner than you need to?”
Retirement today looks very different than it did decades ago, and that isn’t necessarily a bad thing. The real problem is getting over our preconceived notions as to what retirement means in today’s economy and society.
3. Invest in Passive Income Strategies
Many financial experts believe that you need several buckets of income to supplement your retirement. For example, you could have a pension, income from real estate, Social Security and an annuity to help replace the income that you had before you retired.
“Typical retirement planning is that you work like a dog for 40 years, save up and spend from principle until you exhale your last breath,” says Todd Tresidder, financial mentor and author of “How Much Money Do I Need To Retire“ and other books. “If you flip that upside-down and — rather than amassing a big pile of assets — save assets that produce cash flow in excess of your expenses, we then eliminate risks. We create perpetual income.”
Retirement is a euphemism for old-age financial independence. The core of financial independence using passive investments is that you create cash flow from investments that exceed your expenses and only spend the cash flow, not the principle balance. A passive income requires minimal input from you after you invest in it to start.
4. Invest in Annuities
An annuity is essentially an insurance product. You trade a lump sum for equal monthly or yearly payments when you invest in an annuity. For example, a $1 million lump sum payment to an insurance company could provide you with more than $40,000 in yearly payments for you and your heirs the rest of your lives. (Of course, details vary.)
“Annuities shift risks from you to the insurance company,” says Tresidder. “Retirement planning as it’s commonly practiced today is nothing more than self-insurance, where you are accepting most of the risk. Using annuities shifts market risk, actuarial risk and longevity risks from you to the insurance company.”
There are many benefits and several drawbacks to annuities. They may provide higher yields than traditional pension plans and other retirement options, but they also leave no assets for your heirs when you die.
5. Hedge Your Investments
My father-in-law retired after working as an executive for decades at a large, national bank. In addition to his pension, he held a lot of company stock that he received as options. After the financial crisis in 2008, his stock and dividends took a severe hit. The stock has recovered, but my in-laws endured several rocky years.
You can use option strategies to protect your stock positions in many cases. An option gives you the opportunity to sell or buy shares of stock with contracts at a future time at a set amount of money, instead of relying on the fluctuations of the market. If you don’t feel comfortable with options, you can enlist a financial planner to hedge your retirement investments.
6. Get Professional Help
It never hurts to get professional financial help if you are worried about your retirement accounts and if you will have enough saved for retirement. It has never been easier to find qualified financial planning — fee-only, commissioned-based, or even by the hour for giving advice without creating a financial plan.
Insurance companies do not offer retirement portfolio insurance, but there are ways that you can hedge against calamity with your retirement accounts.
Rajat Shah recently faced a tricky situation of reduced claim settlement in spite of having two health insurance policies. The poor guy had taken two health policies for getting adequate coverage, but he was not aware that both the insurers (new and existing) needed to be informed about the other policy.
Like Rajat many people are not aware about the proper disclosure of the existing health covers and, therefore, more often than not face similar issues. In fact, one must be aware of the fact that while taking health insurance, one is required to fill up proposal forms, wherein the insurer asks for disclosure of any existing policy. The main purpose of asking this is because there is a contribution clause in most policies. Although the norms regarding the contribution clause have slightly changed recently, but before we could discuss that, let us first understand what a contribution clause actually is.
The contribution clause means that for the same ‘insured interest’ if there is more than one policy, then in case of any claim situation all the policies will contribute in equal proportion to the sum insured.
For example, suppose a person has two health policies for Rs 1 lakh and Rs 2 lakh each and he makes a claim of Rs 50,000. In this scenario the insurers will pay Rs 16,666 (policy with Rs 1 lakh sum insured) and Rs 33,333 (policy with Rs 2 lakh sum insured), respectively.
“We are finding more and more similar cases mainly due to steep increase in medical cost, which triggers the need for higher sum insured limits. Since most insurers are usually reluctant to issue policies beyond a certain limit of sum insured, depending on the age and the underwriting guidelines of the company at the time of renewal, the insured therefore has no choice but buy a second policy,” informs Pavanjit Singh Dhingra, CEO, Prudent Insurance Brokers.
One may also go for another policy or policies if, suppose, one is having a policy provided by one’s employer and the coverage is not adequate for the entire family. One may also like to have separate policies for one’s parents as well as for one’s spouse and kids. There may be, thus, many reasons for which one would like to go for multiple health covers.
Whatever be the case, however, only buying multiple policies is not enough. You also need to know how to use them efficiently and the procedure of making a claim, otherwise you are also likely to face the situation of reduced claim settlement like Rajat.
For instance, you need to inform about the existing policy or policies to the other insurer(s) while buying a policy or making a claim simply because if you do not disclose this fact, you are violating the terms and conditions of the health insurance contract and in case of investigation this could be termed as mis-representation.
“If a customer is holding more than one health policy, he has the choice to prefer the claim with any of the insurers. For example, if he holds an individual health policy with Insurer X and a group health policy with Insurer Y, he may choose to make his claim with any of the insurers,” says Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance Company Ltd.
However, “it is mandatory that he declares the other policy or policies held by him in the claim form with the claiming insurer because the insurer on whom the claim is preferred has the right to invoke the condition of contribution (sharing of the claims in proportion to the sums insured under their respective policies) with other insurer(s),” adds Bimbhet.
Explaining further, Bimbhet says that in a scenario where the customer holds two policies for Rs 2,00,000/- each with Insurer X and Y, and he has a claim of Rs 3,00,000/, the insured can choose to claim Rs 2,00,000 from one insurer (by submitting all his originals) and take a settlement certificate from the first insurer and claim the balance with the second insurer with the photocopies of the claim documents.
It needs to be mentioned here that there have been some changes in the rules regarding claiming from multiple insurers. Prior to these rules, any claim from multiple insurers had to be in the ratio of coverage and you had to inform all the insurers while making a claim. But as per the new health insurance regulations, which came into effect just a few months back, the contribution clause will not be applicable if your claim amount is less than the sum assured of the insurer where you are claiming. And only if your claim amount is above the sum assured of the policy, the insurance company is allowed to impose the contribution clause.
Most individuals fear that their health cover of Rs 5 lakh or Rs 10 lakh won’t be enough to take care of a medical emergency. They believe advances in medical science, along with the rising cost of treatment, medications and procedures, may wipe out their savings and investment if they contract some serious or critical illness. The fears are not exaggerated.
For example, an organ transplant, say, of liver or lung, can cost Rs 20 lakh to Rs 40 lakh. Even the new medicines for cancer and other serious illnesses cost Rs 500 upwards per tablet. However, most insurance companies offer a maximum health cover of only Rs 10 lakh. But the signs of changes are already there.
Religare Health recently launched Care, a health insurance policy that offers sum insured of up to Rs 60 lakh, the highest offered on any health insurance product in the country. ICICI Lombard and Max BupaHealth Insurance already have products that offer health cover of up to Rs 50 lakh.
“Due to advancement in technology and medical science, many new procedures have been adopted in critical surgeries and treatment of severe illnesses, which come at extra cost. Also, a change in lifestyle is encouraging individuals to take treatment in super-luxury hospitals. These factors, along with the inflation inhealthcare cost, are forcing individuals to look for enhanced sum assured,” says Pankaj Mathpal, certified financial planner and managing director, Optima Money Managers. “Individuals with adverse family history should go for a higher sum assured if they can afford the premium. Wealthy people looking for advance treatment and services in superluxury hospitals can also go for such large sum assured,” says Mathpal.
Also, many people are increasingly opting for medical treatments outside India for critical illnesses. Some of these health insurance products cater to that need, too. For instance, Care covers costs related to medical treatments outside India for individuals opting for a sum assured of above Rs 50 lakh. “This policy provides coverage for hospitalisation abroad for cancer, benign brain tumour, major organ/bone marrow transplant, heart valve replacement, and heart bypass surgery, for a sum insured of Rs 50 lakh and Rs 60 lakh,” says Mahavir Chopra, head, e-business, medimanage. com, a health insurance advisory firm.
DO YOU NEED HIGH COVERS?
Experts are unanimous that a cover of Rs 10 lakh may not suffice for treatment of any critical illness, especially in the metros. Gaurav Mashruwala, a certified financial planner, says, “People won’t have any choice but to visit premier hospitals if they contract any serious illness. In Mumbai, a room in these premier hospitals costs Rs 5,000 to Rs 7,000. A room in the ICU would cost at least three to four times the normal room.” According to him, if an individual can afford the premium, he or she should go for the maximum health cover.
Still, affordability could be an issue for many people. For example, the premium for a health cover of Rs 50 lakh can be in the wide range of Rs 27,000 to Rs 50,000 for a 35-year-old individual, depending upon the product and the number of family members covered by the policy. The renewal premiums will be higher after factoring in inflation and healthcare costs. “These policies do not have a claim-based loading at renewal. However, the premium of every policy increases after 1-2 years because of inflation and rising healthcare costs. So you have to factor in the potential hike in premi-um when you budget for such high-value policies,” says Suresh Sadagopan, a certified financial planner with Ladder 7Financial Advisories.
“I would advise a client to go for the maximum health cover. If affordability is an issue, I would ask them to strike a balance,” says Mashruwala. Striking a balance is very important because one shouldn’t channel all the savings towards health insurance premium.
“From a financial planning perspective, risk is only one of the components that includes term insurance, health insurance and home insurance. So a retail investor cannot afford spending Rs 30,000 only on a health insurance policy when he/she has to think about building a retirement corpus, saving for child’s education, etc. And the premium will only go up as he ages,” says Harshvardhan Roongta, certified financial planner, Roongta Securities.
If you can’t afford the premium, you should try to add a top-up health cover to your existing Rs 5 lakh or Rs 10 lakh cover. The maximum top-up cover available in the market today is Rs 15 lakh. “If you are comfortable getting treated in tier-2 hospitals, a cover of Rs 10-15 lakh in an urban area should suffice,” says Roongta.
Mashruwala suggests another way out for people who can’t afford the premium for high covers. “You should start building a corpus of Rs 5 lakh for medical emergency. You can use this corpus for treatment of your minor illnesses.”