Posts tagged ‘life insurance’

January 9, 2012

Insurance Policies You Should Have

One of the biggest financial mistakes that people make is to not have enough insurance coverage. Many individuals and families find themselves in poverty because they lack certain insurance policies. Some insurances policy most people need include:

Disability Insurance

Those silly AFLAC TV ads with the duck are actually sending you an important message. The message is that you will need some way of paying the bills and the food if you cannot work because of injury or illness. Health insurance will only cover your medical costs it will not pay the mortgage or the electric bill. Social Security Disability payments are only available if you become permanently disabled.

You should have a disability policy that will cover the cost of your day to day living expenses. If you work full time check to see if long term or short term disability insurance is available as a benefit and take advantage of it. If you or self employed or can’t get through your work buy your own disability policy.

Homeowners or Renters’ Insurance

The insurance you purchase with your mortgage will only reimburse your mortgage company not you if something happens to your home. If you rent your landlord’s insurance will not cover the loss of your possessions. Homeowners will need to get a policy that covers the contents of their home. Renters will need a renters’ policy that covers their possessions. Make sure the policy covers all the risks common in your area.

Life Insurance

Many people believe that life insurance is only for those who have children or other family members to support. The truth is almost everybody needs life insurance. It will pay off your debts if you die. Without life insurance your heirs or loved ones could end up having to pay your debts if you die unexpectedly. Something to remember is that life insurance policies are tax deferred so you can deduct from your income tax. It can also be used as an investment.

Long Term Care Insurance

The biggest insurance mistake made by older people is not to have long term care insurance. Such a policy covers the cost of nursing home care, assisted living facilities or in-home nursing care if somebody requires it. Many older people end up selling their homes or using their savings to pay for this. Nursing home and long-term nursing costs are not covered by Medicare. Medicaid will cover some of these costs only for lower income people. For persons over 70 and those in poor health long-term care insurance is a must.

Health Insurance

The national health insurance program in the US, Medicare only covers those over 65 and some disabled people. The other government healthcare program Medicaid only covers the poor. Most residents of the US will have to purchase some sort of health insurance policy. Even those eligible for Medicare will need coverage for expenses covered by the program.

Contrary to popular belief President Obama’s healthcare reform will not provide health coverage. Instead it will penalize people without private health insurance when it goes into effect in 2014. Therefore most residents of the US will have to purchase health insurance after 2014.

If you are traveling outside the US you will need to purchase travel health insurance. Many health insurance policies will not provide coverage outside of the country. Government health insurance programs in countries like the UK will not cover traveling US citizens.

Steven Hart is a freelance writer and a Financial Advisor from Cary, IL. He writes about Annuity topics like Annuity Definition, Annuity Rate, and Best Annuity Rates.

January 9, 2012

Common Insurance Mistakes

It is very easy to make mistakes regarding insurance coverage. Everyday many people lose large amounts of money because they make mistakes concerning insurance coverage. Some of the most common and costly insurance mistakes include:

Not Adding Specific Peril Coverage to Homeowner’s Insurance

There are many losses that specifically excluded from property coverage. These losses include floods, earthquakes and in some cases forest fires. Always read your homeowners’ insurance to see what is covered. If there is a high risk of uncovered risks you may need to purchase additional specific peril coverage. Many people end up facing large losses because they fail to get such coverage.

Not Making Sure Valuables are Covered

Standard homeowners’ and renters’ policies often specifically exclude high-value items from coverage. This can include jewelry, gold, coins, silver, silverware, collectibles, antiques and anything of a high value. If you have high-value items in your home check the policy to see if they are covered. You can purchase additional coverage for them if they are not. You can also ask your insurance agent for a rider to your homeowners’ or renters’ policy to cover such items.

Not Getting Total Replacement Coverage

Read your homeowners’ or renters’ policy to see if it provides for total replacement coverage. Some policies only provide actual cash value coverage. This means that the insurer will only pay you the cash value for what is lost or destroyed.

If Bob had a five year old computer that was stolen and an actual-cash value policy. The insurance company would send him a check for the cost of a used computer of the same model. That would only be $200 or $300. If Bob had total replacement coverage the insurer would send him a check for the price of a brand new computer.

Total replacement coverage covers the cost of replacing destroyed or stolen items at today’s costs. Actual cash value is based on depreciation which is at lot less. Most people will be better off with total replacement coverage.

Not Getting Home Business Insurance

Most homeowners and renters’ insurance policies will not cover losses related to home business. You will need to get additional coverage if you have a home office or workshop.

Mary is a freelance writer who works out of her home. If her computer was stolen or destroyed her homeowners’ policy might not cover its cost. To make matters worse if Mary was sued over an article she wrote the homeowner’s policy would not cover her legal expenses. A business liability policy might cover legal expenses.

Not Taking Advantage of Insurance Tax Deductions

Life, business and health insurance premiums are deductible expenses on your federal income tax. Health insurance and dental insurance are considered healthcare expenses. Life insurance is considered a retirement account so it is tax deferred. Any business insurance is a deductible business expense. These deductions can reduce your tax bill by hundreds or thousands of dollars each year.

Not Having Life Insurance

Many people under 40 or 50 make the mistake of not having a life insurance policy. Parents should definitely have such a policy so their children will benefit if they die. Other people should have a life insurance policy because it will pay off their bills if they die.

Not Having Renter’s Insurance

Many people that rent their homes fail to get renters’ insurance. This is a huge mistake because insuring the contents of a rented home is the renter’s responsibility. The landlord’s policy only covers repairs to or replacement of the structure itself not the tenant’s property.

If George was renting an apartment and had no renter’s insurance. He would have to pay for the replacement of everything in his apartment if the apartment house burned down. That means George would have to use his savings or salary to pay for everything including clothes, appliances, furniture, the TV set, the computer. He would also have to pay for a new place to live.

If he had a renter’s policy, George would get a check to pay for that stuff. The renter’s policy might even cover the cost of renting another apartment.

Steven Hart is a freelance writer and a Financial Advisor from Cary, IL. He writes about Annuity topics like Annuity Calculator, Annuity Interest Rates, and Annuities Good or Bad.