Gap insurance is appropriately named, as it is car insurance that covers the gap between what you owe on your car with what your car insurance company states it is worth. You might ask why you would ever need this type of car insurance, but it has its value.
As we all know that after you buy that shiny new car and drive it off the car dealership lot it depreciates dramatically. Say you bought the car for $20,000 and financed this vehicle over five years for 7.5% and put $0 as a down payment. Guess what, you automatically owe a lot more money on the car than what it is worth, maybe as high as 20-30%, even if you have full insurance coverage. Yikes!
If you have leased a new vehicle gap insurance is often part of the lease deal, but never assume that–get it in writing. It is sometimes covered in your current car insurance policy, but if not dealerships do offer the service–not that that would be recommended way to go because the dealership will charge a higher rate. Go to your current car insurance comapany and see if you are already covered. If not, see if they offer gap insurance (some do not offer it).
Gap insurance is not available for used vehicles, but it is something you need to do research on before you buy a new vehicle because it can cost you a bundle if the worst does happen.
Written by Nagel on April 16th, 2007 with no comments.
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As responsibilities have grown my wife and I have gone forward with getting life insurance for both of us. We have been married for about 15 months and have owned a home for 4 months so we should have started this process earlier, but we didn’t.
We each are going with a 20-year term policy for $500,000. When the policy expires, hopefully we will no longer need to consider the life insurance money necessary to pay for bills. Plus, hopefully we will not have to used it either.
So about a month-and-a-half ago we set up a life insurance physical for each of us. The insurance physical was about 45 minutes for each of us. During this time they draw blood, take measurements and ask a lot of health-related questions.
Unfortunately, my health background caused my policy to be 3x as expensive as me wife’s, but they said within a year that price could be lowered. We have hard from our insurance agent and he will be meeting us soon to sign the papers.
I considered Genworth Life Insurance as well, but we stayed with Erie Insurance because of my wife’s long relationship with them.
Written by Nagel on March 26th, 2007 with no comments.
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Many people want to learn more on personal finance and investing, but do not know where to start. Websites like this one and other personal finance sites are great tools. I also wanted to let you know of other resources available to get you up-to-speed on a wide variety of financial topics.
I would recommend watching Mad Money for investing. He is one of the few who will go step-by-step to help you invest smarter. This can buttress a general investing education you can get from doing some homework. Obviously, there are loads of investing books so look around and see what others have to say about it.
These are from from the only options available. You can easily go to Kiplinger, Money, Smartmoney, Yahoo! Finance, Google Finance, etc. These are all informative and can hold your hand until you get the hang of certain topics you might not have mastered yet.
These are great personal finance education websites to start. Ask around and get people’s opinions on what sources to use. I would recommend using as many reliable sources as possible. It is not easy, but we all want to do better with our money.
Written by Nagel on March 4th, 2007 with no comments.
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Deciding on what life insurance you need can be a daunting task for even the best of us. There are a lot of aspects of insurance that you need to get a grasp of before you make your decision. Smartmoney.com and Yahoo! Finance give these 10 Best Ways to Save on Your Life Insurance. And using these as foundation can help you get the life insurance you need at an affordable price.
The price you pay for life insurance will depend on your age, your health and your habits. That is to say, forget about a really cheap policy if you smoke, have existing health problems or enjoy skydiving. Still, there’s plenty you can do to save on your premium and avoid some common pitfalls.
1. Forget Corporate Loyalty
If you get some life insurance as a job benefit, that’s fine. But that should never be all you have. You can’t count on keeping it if you lose your job or become disabled and can no longer work. There’s no federal law that says your old employer must allow you to keep the coverage, even if you foot the bill. So it’s a good idea to use any life insurance you get from work as a supplement to what you buy on your own. If your company allows you to buy additional insurance, be sure to compare rates on coverage you can buy from your employer; more often than not, you can find a better deal on your own, although you’ll have to qualify medically to get a policy on the open market.
2. Be Sure to Negotiate
Kevin Campbell thought he was just being honest a couple of years ago when he told a medical examiner for John Alden that he smokes a cigar about once a year. The Ohio physician, who plays racquetball once a week and jogs regularly, had no history of medical problems.
He figured the insurer would understand that cigars were simply a way to mark special occasions. No such luck. As far as John Alden was concerned, there was no difference between Campbell and a two-pack-a-day man. The company quoted him a $2,150 annual premium for a $1.3 million, 10-year term policy, $1,150 more than the nonsmoker’s rate.
But Campbell wasn’t having it. He wrote a letter to John Alden demanding a nonsmoker’s rate. After three weeks of negotiating, the company caved in and cut his initial quote by 50%. Says adviser Michael Chasnoff, who helped Campbell set up the policy: “When I started in this business, I would have never thought to question what an insurance company told a client. Now I can’t see a reason not to.” (If you do smoke, ‘fess up. If you die of a smoking-related illness, your insurer can choose not to pay your death benefit, opting instead to return to your beneficiaries only paid-up premiums plus interest.)
3. Buy in Bulk
If you’re going to buy $240,000 of coverage, you might as well buy $250,000. If you buy $240,000 worth, you’ll pay $274.80 per year. If you buy $250,000, it will cost $260. How’s that?
Sometimes more insurance costs less, especially as you approach multiples of $250,000. So, for example, a 35-year-old male nonsmoker buying $100,000 to $249,999 of renewable term insurance from USAA Life would pay $1.02 per $1,000 of coverage. For $250,000 to $499,999 of coverage, the rate drops to 92 cents per $1,000.
4. Health Problems? Seek Out a Specialist
Forrest Luu, 37, has diabetes. When he set out to buy life insurance, he asked his insurance agent, Murray Halbfish, to shop for a diabetics-friendly company. The best deal Halbfish came up with: Manhattan Life Insurance, which quoted him an annual premium of $891 for $100,000 of whole life. Other companies wanted as much as $1,500. As Luu found out, some companies specialize in particular diseases or lifestyles. For heart disease, cancer or other “impaired risks,” companies such as Connecticut National and U.S. Financial offer competitive rates. These companies employ underwriters who are trained to analyze the extent of a given problem. Instead of lumping all diabetics into one group, they rate differences between diabetics who take their medication regularly and diabetics whose disease is out of control. A person whose disease is under control could save as much as 50% on a premium.
5. Don’t Get Churned
That agent who talked you into turning in your old whole life policy for a new one (More coverage! No extra premiums!) didn’t do you a favor. In fact, you’ve been scammed. More often than not, victims of this practice, known as “churning,” receive a bill for new premiums within a year or two — after the value in their old policy has been exhausted. But you can get help if you’ve been ripped off by your agent. Contact your state insurance commissioner to find out how to proceed. Dozens of companies have agreed to compensate victims of these and other illegal practices. Don’t forget to complain to the main office of your insurance company directly. Many insurers are now fairly quick to make whole life customers who have been hoodwinked by their agents.
6. Clean Up Your Act
You may know that you can cut your insurance premium if you stop smoking and lose weight, but you may not know just how much you can save. Well, how does 50% sound? That’s right, most insurance companies charge twice as much to insure a smoker. The rewards for getting back down to the right weight for your height can be just as great.
That’s what Quotesmith President Robert Bland learned. When Bland, who’s five feet, 11 inches and 245 pounds, went shopping for $3 million of term, he got premium quotes ranging from $4,000 to $7,000 a year. When he balked at those prices, he was told that his premium would be more like $3,000 if he were 35 pounds lighter. For the moment, Bland has decided to go with a $4,000 policy from Investors Life of Nebraska. All the same, he’s considering losing weight and reapplying.
7. Don’t Get Taken for a Rider
Insurance companies have come up with a host of extras to pad your life insurance bill, most of them not worth the paper they’re printed on. Consider the accidental-death rider, more commonly called double indemnity. For about $1 or $2 per $1,000 of coverage, an insurance company promises to pay your survivors double the face amount of a policy if you die in an accident.
But it’s foolish to speculate on the manner of your demise, especially since accidental death is relatively rare. If you really want to gamble, buy lottery tickets. Buy enough coverage to support your dependents regardless of the manner in which you shuffle off this mortal coil.
The “waiver of premium” rider is another to skip. Under this rider, which can cost as much as 10% of your annual premium, your insurer will continue your coverage in case you’re disabled. But you should already have enough disability insurance to cover living expenses. If you do, you don’t need a waiver of premium. Finally, some companies offer spousal or dependent riders that add a term-insurance element to your whole life policy that will cover your spouse or your children. Chances are, if your spouse needs term insurance, you can find a cheaper policy. And unless your child is supporting the family, he or she doesn’t need insurance.
8. Know What You’re Buying
Agents call it the “L” word. Life insurance, that is. Some companies teach their agents never to utter the word to prospective clients. Thus you are more likely to hear a host of euphemisms such as mortgage-protection policy, retirement plan and tax-free savings plan.
Don’t be taken in. What agents are selling is whole life insurance, pure and simple. In their sales pitches, agents like to emphasize the tax-free accumulation of cash value in a whole life policy but what they don’t tell you is the down side: High commissions, seemingly endless payments before any sizable cash value is accumulated and murderous penalties if you want to get out early.
9. Try a Low-Load Company
It’s a dirty little secret that insurance agents don’t want you to know. But some companies sell life insurance at little or no commission. That can mean big savings for you, if you’re the type who doesn’t need much handholding to make a decision.
A few of them even sell whole life policies this way. Ameritas (800-552-3553) is a leader in the low-load business with hard-to-beat rates on all types of policies. For example, a female, age 30, can buy $250,000 worth of coverage for just $162 a year. Northwestern Mutual (414-271-1444) is a traditional insurer that sells some low-load policies through its agents. It has some of the best prices around, particularly on whole life policies.
10. Avoid Hidden Fees
Convenient monthly payments, automatically deducted from your checking account. What an easy way to pay your life insurance premium. But before you sign up, ask a simple question: What’s this going to cost me? At many insurers, the answer is plenty. Metropolitan Life, for example, charges some life policyholders fees equal to 15% to 20% of the annual premium simply for the privilege of making monthly payments. Charges like these are often built into the payments, so you may not even know they put the bite on you.
Examine these ten ideas for saving money after studying up on life insurance and then you will be armed with the necessary knowledge to get what you need at a good price.
Free Money Finance has some money saving tips for Term life insurance.
Written by Nagel on January 4th, 2007 with no comments.
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Here we will discuss a couple options you have when deciding on what annuity is best for you.
-Lifetime Income for you and your spouseHere you will be paid as long as you or your spouse still lives. Decide if the initial payment you receive is low or high or if payments will remain the same after the first person dies. The higher payment that drops by half when one spouse dies is another option to consider.
-Lifetime Income for you
You will get the highest income with this option and will recieve a flat monthly payment the remainder of your life. Once you are gone the money stops. So don’t die early!!!!
-10-Year Certain
Flat payment, but if you die before 10 years are up your spouse will receive payments until the 10th year is up.
-Inflation Protection
Your beginning payment would be low, but will increase every year as inflation does.
Written by mike on September 30th, 2006 with no comments.
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More and more companies are popping up these days because the industry sector has more importance. With employees switching jobs and COBRA health insurance costs rising more people are looking to short term health insurance. Even at many jobs you have to wait a specific period of time before you are covered. So people need options.
Short-term health insurance plans gives the insured coverage for a limited period of time. Typically, short-term plans offer coverage up to six months and sometimes 12 months. If you will need health insurance for a longer period short term health insurance is probably not best for you.
- The application process for short-term health insurance is usually simpler than your standard term health insurance.
- Short term health insurance plans protect you against accidents or illnesses, rather than to provide comprehensive coverage.
- Typically they do not include coverage for preventive care, physicals, immunizations, dental or vision care.
Purchasing a short-term medical insurance plan will make you ineligible for any guaranteed issue individual health plans commonly referred to as HIPAA Plans. So be aware before purchasing short term health insurance. Also know that short-term health insurance plans typically do not cover pre-existing medical conditions. Pre-existing conditions are usually considered any medical condition you have been treated for in the last 3-5 years. If you have an existing medical condition you will need to look into making sure that you will be covered. If this is the case then COBRA might be the answer.
Otherwise, if you need a stop-gap health insurance policy the short term health insurance are typically a good and inexpensive option.
Written by mike on July 4th, 2006 with no comments.
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If you rent an apartment you might not know that renter’s insurance is not really an option–it should be mandatory for you. Your landlord’s insurance covers the building; not what is inside your apartment.
There are policies that:
- Protect your private property from fire, theft and vandalism
- Give you liability coverage in case someone is hurt inside your apartment
- Are flexible to your needs
The HO-4 policy is designed for renters, while the HO-6 policy is for condo owners. Both HO-4 and HO-6 cover losses to your personal property from 17 types of perils:
- Fire or lightning
- Windstorm or hail
- Explosion
- Riot or civil commotion
- Aircraft
- Vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Damage by glass or safety-glazing material that is part of a building
- Volcanic eruption
- Falling objects
- Weight of ice, snow, or sleet
- Water-related damage from home utilities
- Electrical surge damage.
Some definitions from wikipedia on types of renter’s/homeowner’s insurance:
- HO-1
- A limited policy that offers varying degrees of coverage but only for items specifically outlined in the policy. These might be used to cover a valuable object found in the home, such as a painting.
- HO-2
- Similar to HO-1, HO-2 is a limited policy in that it covers specific portions of a house against damage. The coverage is usually a “named perils” policy, which lists the events that would be covered. As above, these factors must be spelled out in the policy.
- HO-3
- This policy is the most common written for a homeowner and is designed to cover all aspects of the home, structure and it contents as well as any liability that may arise from daily use as well as any visitors who may encounter accident or injury on the premises. Covered aspects as well as limits of liability must be clearly spelled out in the policy to insure proper coverage. The coverage is usually called “all risk”. Also called an “open perils” policy.
- HO-4
- This is commonly referred to as renters insurance or renter’s coverage. Similar to HO-6, this policy covers those aspects of the apartment and its contents not specifically covered in the blanket policy written for the complex. This policy can also cover liabilities arising from accidents and intentional injuries for guests as well as passers-by up to 150′ of the domicile.
- HO-5
- This policy, similar to HO-3, covers a home (not a condo or apartment), the homeowner and its possessions as well as any liability that might arise from visitors or passers-by. This coverage is differentiated in that it covers a wider breadth and depth of incidents and losses than an HO-3.
- HO-6
- As a form of supplemental homeowner’s insurance, HO-6, also known as a Condominium Coverage, is designed especially for the owners of condos. It includes coverage for the part of the building owned by the insured and for the property housed therein of the insured. Designed to span the gap between what the homeowner’s association might cover in a blanket policy written for an entire neighborhood and those items of importance to the insured, typically the HO-6 covers liability for residents and guests of the insured in addition to personal property. The liability coverage, depending on the underwriter, premium paid, and other factors of the policy, can cover incidents up to 150′ from the insured property, all valuables within the home from theft, fire or water damage or other forms of loss. It is important to read the Associations By-laws to determine the total amount of insurance needed on your dwelling.
- HO-7
- For mobile home owners.
- HO-8
- It is usually called “older home” insurance. It lets house owners with higher replacement cost than the market value insure them at the lower market value rate.
Keep in mind if you have car insurance and renter’s insurance with the same carrier you will get a discount.
Written by mike on June 30th, 2006 with 2 comments.
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Life insurance is not always an easy concept to grasp and it gets more convoluted when discussing which is better: term versus permanent insurance. Because of the confusion getting the right information is crucial.
Term life policies offer death benefits only upon the policyholder’s death.
Whole Life insurance policies offer death benefits plus an account value so that if you live you will receive some amount of money spent on premiums back. It is a sort of hedge or a way to have your cake and eat it too. The policyholder can receive their money back by cashing in their whole life policy or borrowing against it like a home equity loan.
Whole life insurance is more expansive than term life insurance. You will pay more in premiums because you are investing and owning life insurance. So like a savings account, the longer you have paid into it the more it will accrue and the higher cash value it will have.
- Term life insurance is strictly a payment if you die; no savings or interst accuring. Premiums for term life insurance will increase over time while whole life insurance premiums typically do not.
- Whole life insurance’s high premiums at the start means it will grow just like a retirement account.
- The downside is that your life insurance agent gets a sales commission on the whole life policy just as would a stock broker would get a commission by you buying a certain mutual fund that his or hers investing house has a sales deal.
- With whole life insurance the cash value of the account is tax-free to your beneficiary.
You will hear many like Suze Orman say to buy term life insurance and never buy whole life.
The length of time you plan to have the insurance is important in making your decision between the two life insurance products. However, there are so many variable that it makes it difficult to make the blanket statement that if you plan to have the life insurance over 20 years you should get whole life insurance.
Compare
Term insurance
- You can buy term insurance that stops after a specific term, e.g. 10 or 20 years, or that can be continued until age 70 or later. You have the option of choosing to have your premium increase every year–annual renewal term–or you can pay the same amount for your premium for a fixed number of years.
- Most term policies the options of current payment schedule and a maximum rate. Your insurance company wants to be able to raise premiums if the company’s costs increase. With others, the issue is your health.
- Sometimes you will be required at specific re-entry ages to display good health to keep your premiums low.
- Most term policies can be converted into whole life policies without evidence of good health.
- Universal life insurance is more flexible than traditional whole life because the premiums can vary from year to year. Universal life has maximum guaranteed premiums and least minimum guaranteed cash values and death benefits. Instead of dividends, universal life policies earn interest at the credited interest rate determined each year.
- Variable life insurance provides few guarantees and with risk can come reward if the investments go well. There are required guaranteed annual premiums and a guaranteed minimum death benefit. However, if you pick the wrong investments it will hurt your cash value.
Do Not:
- Use Life insurance only as an investment. After all, some of your premiums are being used to buy the death-benefit coverage and to cover other expenses.
- Life insurance should not be purchased on children to save for college.
- You should have all the coverage you need before you buy any on your children.
Written by mike on June 24th, 2006 with 1 comment.
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