Insurance Thoughts To He

lp You

This section contains a few suggestions relative to insurance coverage to help y

ou as a consumer.
The first point is to never go through life without appropriate insurance covera
ges. It could subject you, or those who depend on you, to great financial liabil
ity and/or loss.
Health Insurance/Disability Insurance
This is something you can't be without. If you are a full time student taking at
least twelve credits, many colleges have a scaled down policy that can be purch
ased economically while you are enrolled. If you "can't afford coverage", I'm te
lling you that you can't afford not to have it. If you can't pay full freight, t
hen get coverage with a high deductible. At least then you protect yourself agai
nst catastrophic loss, even if you have to pay the first $5000 over time yoursel
f. It's one thing for your ship to take a hit. It's another to have it sink.
When you are seeking employment, try always to get a job that provides health co
verage for you and also for your dependents. Health insurance is colossally expe
nsive, and even more so if anyone in the family has health problems. It is worth
taking less in the pay envelope and having good health insurance coverage, than
it is getting higher pay and not having it.
Ditto for disability insurance. It is a great benefit to have and should be obta
ined privately if it is not provided by your employer.
Someone might be thinking "I'm not going to get sick" or "Other people might be
disabled, but not me." It can happen to any of us. Being prepared is the best de
fense.
Life Insurance
Never lie on a life insurance application. If you die and the insurer can show t
hat you did, they can refuse to pay. Then where would your family or others depe
nding on you be?
Be sure to have enough coverage. $100,000 is not "a lot of insurance". As a roug
h rule of thumb, you should have coverage that is six to ten times your annual i
ncome. This can include your insurance coverage at work. However, I believe it i
s important to maintain enough outside coverage on your own, in case you lose yo
ur job or leave it and the insurance benefits that go with it.
When considering extra insurance, see if you can obtain more through work (suppl
ementary insurance) that you would pay for yourself. It may be cheaper to get an
other $50,000 worth of coverage this way, than to go out into the open market an
d try to get it. While you would lose basic coverage if you lost your job, suppl
emental coverage would not be taken away, as long as you kept paying the premium
s.
If your household needs the income of both people working to meet mortgage and o
ther expenses, then there should be enough coverage on both parties. Men aren't
always the ones that die first. In any case, if there are minor children, it cou
ld be a triple tragedy to lose a spouse, then have to sell the house and not hav
e enough to support and educate your children.
Whenever there is someone who needs to be protected by insurance proceeds in the
event of a death, it is the NUMBER 1 personal financial planning priority. Havi
ng an emergency fund of 3-6 months income and paying the mortgage before other e
xpenses, and paying yourself by saving through payroll deduction into savings or
retirement accounts also rank highly. After life insurance and the mortgage, al
ways pay yourself first.
In the event that you are divorced, speak to your attorney about the advisibilit
y of changing your life insurance policy beneficiaries. Just because you are div
orced does not automatically prevent your former spouse from receiving policy pr
oceeds in the event of your death if you previouly named him/her benefiiary. Thi
s is only one of the many reasons that anyone obtaining a divorce should have le
gal counsel instead of "doing it themselves" and "saving". Saving a few bucks ca
n prove very costly in the long run.
Life insurance policies have a grace period allowing the premium to be paid up t
o 30 days after it is due. Do not allow a payment due to go into a grace period.
If you forget about making the payment and died, you will have denied your bene
ficiaries of the needed resources, all because of carelessness. Borrow the money
if you have to. Otherwise, it's like leaving those who depend on you alone, out
on rough and high seas, without a boat.
One final point: Self caused deaths by illegal drug overdoses or engaging in ill
egal activity can be exclusions to a policy. There are many other reasons not to
use drugs. This is certainly one of them. Who should risk policy proceeds being
denied to a spouse and children because of the use of illegal drugs?
One also may never recover under a life insurance policy as a beneficiary, if th
ey have been involved in the felonious death of the policyholder, e.g., a man pa
ys a hitman to kill his wife or a wife poisons her husband.
Incontestability - An insurance company has two years to question statements mad
e on the application. If they do not do so within this period, they can no longe
r contest it. There is no time limitation for fraud however, namely making state
ments known to be false to induce the insurer to insure. This applies particular
ly to "objective statements" that are not open to interpretation, e.g. "Have you
ever had heart surgery?" Either you did or you didn't. It is not open to interp
retation. Answers which are more subjective, and which are open to interpretatio
n, are less likely to cause problems. In either case, great care should be taken
however to tell the truth. Lying can produce dire consequences.
Legal Counsel
Whenever you need legal counsel, make an appointment and pay what it costs. Be s
mart. Avoid trouble. Whenever you wonder if you need to see an attorney or not,
you do. Let the attorney tell you what you need to know or do. Don't guess yours
elf -- and guess wrong.
While you're there, ask about having a will prepared. You might think you're "to
o young" to bother with this. I had two friends I grew up with who were married
and had children. Both died accidentally, one at 22 and the other at 27. One of
the widows told me to tell anybody I knew to be sure they had a will. One of the
husbands didn't and it caused her many problems. Two other friends died at 42,
leaving wives and children. Better to be prepared so that you eliminate any prob
lems for your survivors.
Homeowner's Policies
Fill out applications truthfully, so the insurer can't refuse to pay later.
In addition to the usual coverages for property damage due to fire or other caus
e, these policies also cover a number of away from home matters, such as theft l
osses from your car.
Do not go cheap on this policy. Get a comprehensive policy that covers as many t
ypes of losses as possible. The additional premium for this coverage is not subs
tantially higher.
Never leave a home vacant for an extended period of time. It can cause your cove
rage to lapse. The usual limit is thirty days. Ask your agent for advice if you
would be away longer.
Videotape home contents, save receipts and keep both away from the home, so they
wouldn't be destroyed by a fire,flood or other catastrophe.
Obtain riders for coverage on any special collections, such as coins, or for art
, antiques, expensive china, etc., since there are modest limits in standard pol
icies for such items. Do not keep a lot of cash in your home. There is usually a
modest limit for cash. It also makes your home a robbery target.
In the event you do suffer a major loss, such as in a fire for example, ask your
attorney if he/she thinks it advisable for you to obtain a "public adjuster". A
public adjuster deals with the insurance company on your behalf and may be able
to obtain more for you than you might otherwise get.
It is very important to have a "replacement cost coverage" rider for all propert
y contents. If you don't, the insurer may only pay depreciated market value for
lost items. If you spent $600 for a television five years ago and it is destroye
d, a six year old model may only be worth $200 now, for example. If you have rep
lacement cost coverage, the insurer would pay to have you be able to obtain a ne
w television,similar to the one you had. The extra premium is next to nothing. I
t is foolish not to have it.
There should also be an "inflation rider" in your policy for your home so that y
our coverage increases annually based upon the construction cost index applicabl
e in your area. In no event should the coverage be allowed to fall below 80% of
its market value.
One of the best protections you can have is to have a trusted insurance agent. A
sk your attorney or friends for recommendations. Look for someone who is going t
o look out for your interest first, not trying someone who is just trying to sel
l you something. This applies to all insurances, not just homeowner's. Find some
one you trust and listen to what they tell you.
Floods are not covered by standard homowner's policies. You need a separate floo
d insurance policy, which the lender will require if you are determined to live
in a flood prone area.
Auto Insurance
Never go without liability insurance or without sufficient collision and compreh
ensive coverages if your car is of any value. If you are financing the vehicle,
you will be required to have both coverages. Collision covers damage to the car
when you are moving. Comp covers it when it is sitting still, such as if a tree
falls on it, or if an ice cream truck runs into it when it's parked, both of whi
ch happened to my car without a period of a year.
Be careful who you lend your car to. You could face liability if they have an ac
cident, particualrly if they are a known poor driver, have DUI's or are driving
on the revoked list.
If you have an auto accident, be sure to file an accident report. Do not move th
e vehicle until the police tell you to do so. Also never say to the other driver
that "It was all my fault." Just call the police and 911 if someone is hurt. Th
e main thing is to get help for whoever needs it. The rest will work itself out
later. Be very careful of making any statements without talking to your attorney
first.
Go to the hospital if it is suggested. Let them take whatever diagnostic "pictur
es" they need to. Not only might they be needed to treat any injuries, but can a
lso be very important if you have the necessity to file suit. If you have been i
njured, have someone at the hospital or someone else take clear photographs of y
ou from all sides to show any of your injuries. Make sure to get a police report
. The investigating officer's statements can be very important.
A trusted attorney and insurance agent are your best guides to dealing with insu
rance matters.