A Tribute to Disability Insurance Awareness Month

 By: Millicent Davis

Last month was disability insurance (DI) awareness month.  In light of many businesses cutting back on providing health care benefits to its employees you have to be concerned where your benefits stand on the chopping block.  Some businesses are offering benefits, but what has been cut out or not included in the plan?  You need to know what benefits you have and what truly do they cover.  Consider the following:

More that 10% of Americans between the ages of 18-64 currently have a disability according to the U.S. Census Data

In the United States a disabling injury occurs, on average, every second, according to the National Safety Council.  An average of 498 Americans becomes disabled every 10 minutes.

The Council for Disability Awareness (CDA) has found that 100 million Americans are not covered by private disability insurance.

Just like with most insurance benefits DI awareness is not different.  There is a huge disparity between what people know and how they act, relative to the realities of insurance and its economic impact on lives.

Misconception #1 “It can’t happen to me.”

The CDA survey points out that most people are in denial of a disability happening to them.  83% of people surveyed stated a disability could happen to anyone but deny specifically if it could happen to them.

Misconception #2 “My current benefits will cover me.”

The CDA reports that “Most people know they are covered in the event of a job related disability , but they may not know that nearly 90% of disabilities are not work related and therefore may not qualify for workers compensation benefits.”

You have to bridge the gap!  How?  Become knowledgeable about what you have.  Ask questions and decide if what you have is enough for you and your family to survive on in case of income lost.  The best action is BE IN THE KNOW!  Don’t wait until it is too late and an event is upon you.  When it comes to protecting you and your family you need to be Proactive rather than Reactive.

Cover it!

By Millicent Davis

I had received a referral from a client regarding a friend who had let their home owner’s insurance lapse. Unfortunately, because of the economic crisis they had to make a decision regarding whether to keep their home owners insurance when they lost their job.

If I had gotten to them sooner, of course I would have advised not to let it lapse, but since the policy has lapsed over 60 days we had to figure out a way to get them properly protected again.

WHAT CAN ONE DO!

If ones home has a mortgage on it, the mortgage company will take out a “forced policy” to cover themselves. This is a policy covering the lender, insuring that it would get its money if something was to happen to the home These policies are often more expensive and the mortgage lender will attach the additional amount to the mortgage.

Rather than letting their insurance lapse, one can call their agent, because most companies have different payment plans and cost-cutting techniques. At least there is coverage.

Installing smoke detectors and deadbolts, for example, may lower premiums. So can adjusting the deductible; it sets the threshold at which insurance kicks in.

One needs to ask oneself, ‘If I had a loss today, how much could I afford to put out before I called the insurance company?’ If one could afford $1,000 (instead of $500), then take a higher deductible, which lowers the premium.

The average fire loss is more than $10,000 according to the most recent statistics from the Insurance Information Institute, and fire is among the leading reasons for insurance claims

If your policy has lapsed, one can ask the home owners insurance company to reinstate them. Some time they will but it will be one at a higher risk rate, so it’s best to shop around for the best rate possible.

To find companies that deal with high risk clients one can call the National Association of Insurance Commissioners (NAIC). The NAIC is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia, and five U.S. territories.

 Know Your Exclusions

Homeowners also need to realize insurance does not cover every possible loss. The list of exclusions can be extensive.

For example, policies usually don’t cover insect and rodent infestations, landslide damage, settling and cracking, damage to vehicles in garages or loss of value caused by neighborhood development. Earthquake and flood damage also aren’t covered unless the homeowner buys special insurance to cover those calamities.

Some insurers also exclude liability coverage for injuries caused by certain breeds of dogs.

The important part about homeowner’s insurance is that it will tell you what’s not covered on the exclusion page of your policy.

Homeowners have two choices: replacement cost or actual cash value of the damaged, destroyed, or stolen items. Such as if you have a fur coat and the actual cash value of the coat that cost $40,000 a decade ago may be only $10,000 now. If its owner opted for actual cash value coverage, that $10,000 is all that will be paid out.

Most time a home is one biggest asset. Protecting it is vital and important. It pays to know what your insurance policies are providing for you. It also pays to shop around and try to bundle. When one bundles home and auto together the rates get cheaper.

If you like to quote contact us. We provide quotes from various insurance companies. That’s the best way to shop.

Got Insurance Check It!

 By Millicent Davis

Published April 1, 2011

A friend of mine recently told me a story of how she had a whole life policy and had to borrow against it for an emergency situation that had presented itself.  Later on, learning more about insurance she decided to switch from Whole life to Term Insurance; and was told when she wanted to cancel her policy that she actually would owe more money than the policy was worth. She found out the money she was allowed to borrow was not her money, and she would have to pay the money back with interest.  She also was told that her face amount was reduced as well.   Another thing she found out too late was that when she thought the policy would pay for itself, and she would not have to make any payments, the cash value was actually making the payments thus reducing any cash value she thought she would have when the time came to surrender the policy.  She was quite upset.

Most people do not know that many times Whole life insurance is just that, insurance that one pays for their whole life (Smart Money, September 10, 2009) and the cash value that one accrues is not theirs.  Upon surrender the insurance company will either give the beneficiary the face value minus any loans taken against it, or the cash value if there is any left (Insure.com May, 7, 2008). The beneficiary WILL NOT get both.

Everyone needs life insurance.  No one wants to think about tragedy or loss, but one should prepare for the unexpected.   Whether you are a breadwinner or a caretaker, your death would impact your family in so many ways.  One needs to protect their family with life insurance, and knowing what kind of insurance one has is important.

Most experts recommend term life insurance, which is the most common and affordable type of life insurance.  How much insurance one needs depends on one’s financial situation, but a good rule of thumb is to replace five to seven times one’s annual salary (The Washington Post, March 10, 2009).

It is time to review your policy.  Don’t be caught out there like my friend.  The good news is that she has time to deal with the situation, and she did by getting term insurance and investing the difference.  That way the beneficiary gets both the face value of the policy and the cash.   IT JUST MAKES SENSE!

Choosing the right life insurance policy means fighting your way through all that sales talk and endless marketing to figure out what you’re really buying. If you compare term life insurance vs. whole life insurance, you’ll have a better idea of what you need.

Term life insurance defined
Term life insurance is just what it sounds like: a life insurance policy that ends after a specific term, or length of time. The term can be as short as 1 year or as long as 30 years or more, depending on the specifics of the policy that you buy. If you still want life insurance after the term is up, you’ll have to apply for a new life insurance policy.

Term life insurance gives you a lot of coverage for a relatively small monthly premium. Since there are fewer types of term policies available, it’s easier to comparison shop.

On the downside, you’ll have to reapply for life insurance when your term expires. This means you will have to fill out another application or undergo another physical exam. If your health status has changed, you may be denied coverage. In addition, you can expect your premiums to increase each time you renew your coverage, because costs rise as you age.

Whole life insurance defined
Whole life insurance is also known as permanent insurance because, as long as you pay your premiums, the policy is yours for life or until you decide to cash it in. Whole life insurance has two components: life insurance coverage combined with a savings fund that is designed to grow every time you make a premium payment.

Your policy is yours for life, which means that you will never have to reapply for coverage. Therefore, you will avoid being denied coverage due to poor health, old-age or other factors.

Your premiums are set when you purchase your policy, and they will not increase unless you increase the face value (death benefit amount) of your policy. Not all permanent life insurance policies allow you to do this, so if it’s an option you want, make sure to get a policy that has it.

A whole life policy has the potential to accumulate cash value because a portion of each monthly premium is saved and invested for you by your insurance company. Should you choose to cancel your policy, you will get the cash from your policy’s savings fund. You can also borrow against the money accumulated in your policy’s savings fund, though this should be limited to financial emergencies, not splurges.

.Whole life coverage is a very useful estate-planning tool because money paid out from the savings fund is usually tax-free. This money is available as soon as you pass away, so your beneficiaries will be able to use it while they wait for the rest of your estate to clear probate.

Drawbacks to whole life policies include the sheer number of them available, which makes comparison shopping difficult. It pays to compare the offerings carefully, because policies vary widely from company to company. In addition, fees and commissions can be very high, in some cases eating up the majority of your premium payments during the first few years that you’re covered.

The investments used to accumulate savings in these policies aren’t all guaranteed. This means that you may not get any cash accumulation, or you may lose the value of your savings contributions. Be sure you understand the types of investments that a whole life policy uses, including their investment risks. Don’t buy the policy if the investments make you uncomfortable.

What’s the best life insurance for you?
The type of life insurance coverage that will suit you best depends on your age, heath, financial situation, reason for getting the coverage and personal preferences, as well as the needs of your family. When you compare your individual needs against the benefits and limitations of the types of coverage available, it will become easier to decide which type of policy to purchase.

As a general rule, term life insurance is the most cost-effective option for young, healthy adults. Keep in mind that as you age, or if you develop a medical condition, your premiums will rise. To calculate how much coverage you should have, multiply your current salary by the number of years until you retire.