Auto

How does where I live affect my premium?

Where you keep your car directly affects your chances of having an accident or becoming a victim of theft or vandalism.  The likelihood of encountering these problems increases in larger, more densely populated cities, while such incidents remain relatively low in rural areas.

Additionally, the time and efficiency of police response and law enforcement, local road and traffic conditions, and the quality of local medical services can affect regional insurance rates.  Some insurers even factor in the litigation rates in a given area (how many lawsuits are filed, go to trial, out of court settlements, and their amounts).

Do all states require some kind of Liability insurance?

No.  Although not every state requires Auto insurance, some have financial responsibility laws mandating all drivers to be able to pay for any damage or injury they might cause.  However, Liability insurance is still the best way for you to meet your state's financial responsibility requirements.

By law, all states offer UM and UIM policies, including no-fault states.  In fact, some states require all motorists to carry this coverage in order to gain protection from inadequate insurance coverage of other drivers.

How do I keep my insurance company from canceling my policy?

Besides maintaining a clean driving record, consider investing in special safety and security features for your car.  If you've been in an accident, consider taking a defensive driving course.

What happens when I loan my car to someone? Is that person covered by my policy? Am I still covered?

Yes.  Liability and coverage for Physical Damage (i.e. Comprehensive and Collision) always follow your car.  Plus, if the driver of your car is insured, his/her policy will also be available to cover the cost of damages and injuries.

The same rules apply when you borrow someone else's vehicle; your own insurance follows you no matter whose car

  

Homeowners

Who decides on the type of insurance, the mortgage company or me?

You do.  The mortgage company collects a set amount from you each month in order to protect their investment.  This money is put in escrow and covers your insurance and taxes.  However, the policy is still yours and you might select the insurance you feel offers the best coverage at the best rates.

What exactly does a Homeowners policy cover?

Exact coverage is impossible to define because there are different policies and about 900 insurance companies writing Property/Casualty business in the United States. However, 80% of Homeowners policies are based on a standard form.  All Homeowners policies cover two important areas: Property and Liability.

Property insurance covers your structures and possessions.  Personal Liability, as its name implies, means you're legally obligated to pay money to another person for actions caused by you, your family, or your property.  That liability extends to medical payments to others for injuries caused by you or your family.

Are floods, earthquakes, and other natural disasters covered?

Most catastrophes are covered.  Flood and earthquake damage, however, are not covered by a standard policy and both perils are more common than many people realize. We can advise you on such normally excluded conditions as floods and earthquakes.

Are there exclusions I should know about?

Exclusions listed and defined in your policy might include neglect, intentional loss, earth movement, general power failure, and even damage caused by war.  If you fail to take care of your property (e.g., a leaky roof) you might not be covered.  Obviously, if you intend to lose an object or damage your property, there's no coverage.

One other exclusion that can be costly is the Ordinance or Law exclusion.  Building codes established by governmental bodies that drive up the cost of rebuilding or repairing after a loss occurs might not be covered by your insurance policy.  Thus, if you discover when replacing damaged property that current law demands higher grade or more expensive materials than those you're replacing, the new materials might not be covered fully

 

Life Insurance

Do I need life insurance?

You need life insurance if anyone depends on your income.  In such cases, life insurance solves many personal and business financial problems.

Personal needs

As a young parent; you may need life insurance on your own life to enable a surviving spouse to raise the children.  When you are older, you may need life insurance if you are financially responsible for an aging parent or want to provide funds to take care of final expenses, debts or taxes.

A general rule suggests buying protection equivalent to FIVE TO EIGHT TIMES YOUR ANNUAL INCOME.  Your needs may vary according to your financial assets and liabilities.

Life insurance can solve your heirs' immediate and long-term needs.

  • Immediate needs include: funeral expenses, unpaid medical bills, debt and taxes.  Having money to pay immediate expenses may give your heirs time to readjust their lives, free from money pressures.
  • Long-term need for the care of dependents, college expenses and, in general, providing financial resources.

Business needs

Life insurance is often the solution to:

  • Replace a key person and provide the funds to cover the costs of locating and training a replacement.
  • Continuation of the business when a proprietor, partner or co-owner dies.

What is a beneficiary?

This is the person or financial institution (a trust fund, for instance) named in an insurance policy as the recipient of the funds in the policy, in the event the policyholder dies.

In addition to naming a specific beneficiary to receive the proceeds of your life insurance policy (permanent or term), you should name a secondary or "contingent" beneficiary, just in case you outlive the first beneficiary.

If there is no living beneficiary, the proceeds will be paid to your estate and have to go through probate proceedings, resulting in a possible delay before your family receives the money.  If the proceeds go into the estate, these proceeds may be subject to estate taxes.


How can I locate a lost life insurance policy?

If you suspect that someone who has died may have had a life insurance policy and named you beneficiary, there are several steps you can take to track down the missing policy:

1.       Call your state’s department of unclaimed property to see if the insurance company put the policyholder’s name on their list.

2.       Check the deceased’s safety deposit box at the bank, their file cabinets and personal computer records to see if you can find the policy.

3.       Look for old checks written to insurance companies in the past to trace old policies.

4.       Ask older relatives if the deceased ever mentioned that they had a life insurance policy and which company they had it with.

5.       Call the insurance company that provided auto and home insurance to the deceased, because they might have used the same company for life insurance.


Where can I get additional information on life insurance?

For more detail on life insurance, you can contact:

What are the advantages/disadvantages of term and permanent insurance?

There are pros and cons to buying either term or permanent (cash value) insurance.  Each has advantages and disadvantages. One or the other or both may be appropriate to meet your insurance needs.

Term Insurance

The advantages of term policies include:

1.       Term premiums are lower than those for permanent insurance so you get more insurance coverage for less money. This allows you to buy more coverage when you need it the most, such as when you have young children.

2.       Because term provides insurance for a specific period of time, it is ideal for covering specific financial needs such as covering your life until your children are through college, until they are self-supporting, or covering your life until you pay off your mortgage.

The disadvantages of term policies include:

 

1.       Premiums increase every time a policy is renewed, so the cost of term insurance can become prohibitive as you near your late 50s and 60s.

2.       Term life doesn't provide a savings feature known as cash value. Term policies only pay benefits if you die while the policy is in force.

3.       If your insurance company wants you to take a medical exam when you want to renew your policy, you may be turned down if your health condition has deteriorated.

4.       You could outlive your coverage, because term insurance is generally not renewable after age 70 or 75, depending on your state insurance regulations.

Permanent (Cash Value) Insurance

The advantages of permanent insurance are:

1.       You lock in a premium rate at whatever age you start the policy and the benefits are guaranteed for as long as you live.

2.       Your policy accumulates cash value that grows tax-deferred.  Your premiums are invested by the insurance company in stocks, bonds, real estate, venture capital and other funds, and you receive a return on your money in the form of annual dividends, which increase your cash value.

3.       You can tap that cash value while you are alive with low-cost loans.  Any outstanding loans will reduce your policy's cash value by the amount of the loan.  Or you can withdraw the cash value, though you will have to pay income taxes on those withdrawals.  You can also convert your cash value into an annuity that will provide fixed-income throughout your retirement years.

4.       If you surrender your policy by discontinuing to pay premiums, you will receive any accumulated cash value.

5.       Dividends can be used to pay your premium in whole or in part.

6.       Once you have passed the medical tests and have been issued a policy, your policy cannot be cancelled for medical or any other reasons if you continue to pay the premium.

The disadvantages of permanent insurance are:

 

1.       It is far more expensive than term insurance.  This means that you can usually afford far less permanent coverage than you can afford term.  If you start a permanent policy and then must drop it because you cannot afford the premiums, you will have lost a great deal of money.

2.       Insurance companies invest your cash value quite conservatively so it is possible that you could earn higher returns on your own if you are a skillful and knowledgeable investor.

3.       The return you earn on your cash value is determined by current interest rates in money markets.  So if interest rates are high, your cash value will grow much more quickly than if interest rates are low. Periodically, the insurance company deducts its expenses and a mortality charge from your cash balance. The mortality charge is the amount of money, based on a premium rate per thousands of dollars of death benefits, required to provide you with life insurance.  The company will guarantee a minimum interest rate and a maximum mortality charge.  Some will also guarantee a maximum expense charge.


Can I replace my old policy with a new one?

Yes!  But, if you already own a life insurance policy, think carefully before you replace it with another.  Do not give up your old policy, until you can determine if you are:

1.       Still insurable.
If your health has deteriorated, you may be refused coverage after a medical exam by the new insurance company.

2.       Going to save money.
You are now older than when you bought the existing policy and your premiums will be higher based on your age alone.

3.       Not giving up valuable benefits.
Your older policy may have protections, dividend rates or other provisions that the newer policy may not offer.

4.       Not leaving behind cash value.
Ask your agent what will happen to any cash value that has accumulated in your old policy if you replace it with a new one.

It is possible that a new policy will offer superior features, lower premiums and more coverage that would make a switch worthwhile. Just make sure before you proceed with the replacement.