Whenever the topic of insurance for property damage or theft comes up, it commonly gets directed toward homeowners. But renters of houses and apartments need insurance, too. This is commonly referred to as renters insurance.
The landlord, of course, is responsible for damage to the building through the ordinary-covered perils of fire, theft etc. But whatever your landlord does to protect his or her interests will not work to cover your contents of any liability issues that may arise while you are living in that rental unit.
Because you are not covering the building, renters insurance is also a whole lot cheaper than homeowners insurance. The basic renters insurance will cover the interior of your apartment, meaning carpets, walls, built-in book cases or cabinets, kitchen appliances and any other contents that you’d like to cover. The amount of coverage you may buy is similar to how it works for homeowners. You can have a large deductible or a small deductible. You may insure the property for a certain amount, depreciated value or full replacement cost. Look at prices for the full range from low to high benefit coverage and make your decision based on your budget for coverage and the value and quality of your contents.
Beyond the “stuff” part of renters insurance, there are other major components worth noting. First is the liability part. Replacing your stuff from a fire would sure be costly, but it may pale in comparison to a liability that could arise if anything in your apartment was a cause of the fire. And like homeowners insurance, that liability coverage may extend to you for liabilities that arise outside of the rental property. This liability component may also be an integral part of your overall umbrella liability policy. Remember that your umbrella liability policy only kicks in and pays benefits after the maximum possible underlying limits from homeowners or auto coverage are exhausted.
Another important component is alternate housing insurance. If your dwelling becomes uninhabitable because of a covered peril, you will be covered for extra expenses incurred while your residence is repaired or you find alternate housing.
Many people have been holding off on updating their estate plans because of the uncertainty in Congress about the future of estate taxes. There is little doubt among tax experts that the estate-tax rules will likely change before the end of the year, but complete estate plans deal with a lot more than just taxes. And while I am one of the biggest advocates that you’ll ever meet when it comes to reducing or eliminating estate taxes, this article is going to focus on all of the non-tax reasons that you may need to consider while updating your estate plan.
Let’s start with dispositive provisions. This is the language that you use to decide who gets what, and when. It is common to have restrictions so that children won’t receive large sums too soon. If you haven’t built these provisions in, you should seriously consider doing so. If you have provided for that, check to see that the specific language still fits. New circumstances - such as a pending divorce or illness - may have made your former choices no longer ideal.
What about your choices of the people appointed to serve, such as the executor of your will, the trustee of your trust or the guardian of your children? Are these choices still appropriate or the best people available for the task? Perhaps your children are now responsible, financially sophisticated adults who are ready to replace your aging sister as trustee.
Do you have a durable power of attorney? This document basically gives the appointee the same power to act over your assets that you have. This is very crucial if you are unable to act on your own behalf due to medical inability or distant travel. If you do have one, is that person still interested and capable of executing on such a broad, strong power? Beyond the person holding the power, do you know the rules of your financial institution? Some will only honor a durable power if it is less than a few years old, others only if it is on their form, and others may never honor your durable power without a big battle.
And lastly, do you have an updated health care power of attorney? This gives someone else the power to make health-care decisions on your behalf if you are unable to do so. Sometimes, even with a document, a battle or disagreement ensues over the health care of a loved one - but it is better than what happens if there is no such document.
For some, reducing debt to a manageable level seems like a dream. With the typically high rates that credit cards carry, paying off those loans could take decades if you are only able to pay the minimum amount due each month.
Add the home mortgage, a car loan and perhaps some college loans and you have a situation that becomes very difficult. So where do you start?
The obvious answer is to throw extra money toward debt reduction each month. If you are not able to pay down extra or even pay on time, you need to take stronger measures. The first solution is to examine your budget to see where you can trim expenses. Spend less, and when it comes to buying things you need, consider a less expensive alternative.
After you’ve trimmed your expenses to the point where you can’t trim any more, it’s time to see if there are ways to make more money. Can you get a second job for a few nights a week or weekends? Don’t say no until you try. Even if you only make an extra $500 or $1,000 per month, it would help reduce your debt.
Try calling your lenders and tell them you are having trouble making the payments on time. Ask them if help is available and whether they will lower the interest rate on your loan. If you can get a rate lowered from the 18 percent range down to the 10 percent range, it would make a big difference. Take that savings and use it to pay extra principal on the loan.
Consider calling one of the nonprofit consumer credit agencies. Some don’t do much except take even more of your money. But there are some that have helped consumers consolidate and pay down their debts.
If you are trying to pay down credit card debt, do not use them. Know the difference between needs and wants. Until this situation is under control, spend for needs only, and defer the wants until you reduce your debt.
Buying a want every now and then may be good reinforcement for your new behavior
September is officially life insurance awareness month, something that should be on your mind if you have dependants who rely on you for financial support.
According to LIMRA, a not-for-profit life insurance marketing and research organization, about 70 percent of adult Americans have no life insurance at all. The remaining 30 percent have, on average, about four times their annual earnings in life insurance coverage - often way too little for the average family.
The correct answer to how much is enough lies in the facts and circumstances: the facts such as how much you’ve saved, how much the survivors spend, large anticipated expenditures such as college costs or home repairs, and circumstances such as the survivors’ ability to earn or any special needs that should be tended to after your death.
The correct method is a calculation typically called a capital needs analysis or a life insurance needs analysis. Sounds complicated, but it really is very simple. I found numerous free sites on Google that offer assistance with calculating life insurance needs. My book, “The Complete Idiot’s Guide Personal Finance Workbook” devotes a chapter, along with an interactive spreadsheet, to help you decide the correct amount.
In today’s two-income families, this is a calculation that should be performed for each wage earner. In some cases, you may want to factor in the unknowns - such as the reaction of surviving spouses and their ability to deal with tragedy. Cutting the calculation so close that the survivor has to start back to work immediately may be detrimental. Survivors frequently need time to adjust and reevaluate their lives in light of becoming a single parent and the sole bread winner unexpectedly. Perhaps more time with the children becomes more important than a career.
In the case of a family where only one spouse materially contributes to the household income, do not ignore the needs of the spouse who takes care of children or aging parents. The cost to replace those care-giving services may be unaffordable.
Everyone likes to complain about the cost of life insurance and what else they can be doing with that money. I have never, however, heard a beneficiary complain that the tax-free death benefit that they receive is too large.