August 2020 – Crossing T's and Dotting i's

I am constantly learning from Cyndi Jeffers, CIC, and thought you might also. She has answered thousands of questions over her 30+ year career, but we don’t have enough time or space to cover them all today. We’ll start with the following 11 points to clear up some common misconceptions about different types of insurance.

PRO TIP: When shopping for insurance coverage, make sure you compare apples to apples. You get what you pay for with insurance, and a lower premium can be an indicator that some of the coverages you had are no longer there, or that the agent didn’t input your information correctly (which could result in denial of a claim).

How much liability insurance coverage do I really need? Purchase enough coverage to protect your assets. If you own a business, and it’s not an LLC or corporation, include the business assets in the total and make sure your business liability is enough to protect your business and personal assets.

When should I add Long Term Care? Long Term Care insurance is not just for the elderly – a bad accident or a debilitating disease can affect a person of any age.

PRO TIP: Take responsibility for maintaining your home. Most things that happen are caused by lack of maintenance, and insurance doesn’t cover that.

PRO TIP: Drive defensively – don’t assume the other driver knows what they’re doing. Most auto accidents are caused by distracted drivers.

What’s the difference between Market Value and Tax Appraisal? Property insurance is not based on market value or tax appraisal. Market value is a reflection of what someone is willing to pay for a property; tax appraisal is typically based on market value, a set millage rate, and a tax rate. Neither market value or tax appraisal are good indicators of what it would cost to rebuild your home or business building as it stands now – that’s what insurance is for.

A millage rate is the tax rate used to calculate local property taxes. It represents the amount per every $1,000 of a property’s assessed value. Assigned millage rates are multiplied by the total taxable value of the property in order to arrive at the property taxes.
from investopedia.com

When should I contact my agent? Major changes should always be reported to your agent! It’s not about possibly raising your premium – it’s about continuing to pay premium for a policy that may no longer fit the situation and therefore may not provide coverage in the event of a loss.

Can I use my personal auto insurance for my company vehicle? If you use a personal vehicle for business, be sure your agent is aware of it – there is only limited coverage for business use on a personal auto policy. If you have an advertising sign on your vehicle or you have employees who drive your vehicle, it’s time for a commercial auto policy.

I just wrecked my car. Who do I call first? Before you call the 800 number to file a claim, contact your agent to discuss what happened. People often panic and call the insurance company, setting up a chargeable claim when maybe the damage is less than the deductible, the other person’s insurance is responsible, or you find it’s a maintenance issue not covered by insurance. Your agent is there to help you!

Can I change the type of roof on my house that was damaged by a storm? The basic purpose of insurance is to put things back the way they were before the loss occurred – it’s not meant to provide additional benefits. If you didn’t have a metal roof on your home before the hail storm, you will not have one after the claim is settled (unless you pay the additional cost yourself).

PRO TIP: If you know of someone who committed insurance fraud, report them – their actions are affecting everyone, including you!

Insurance fraud is a major factor in insurance premium increases. Property & casualty insurance companies lose approximately $34 billion a year to insurance fraud, while as much as $259 billion was paid out as a result of healthcare fraud in 2010 alone. In addition, the cost of combating fraud is also passed on to the consumer. Insurance fraud takes many forms and is committed by insureds, contractors, healthcare professionals, etc.

My husband and I purchased a term life insurance policy 18 years ago, shortly after the birth of our first child. I’m not sure we would have thought to buy if my father had not been an insurance salesman; nonetheless, we felt like responsible parents. All I knew is that it was fairly inexpensive and that I hoped we would never use it. Thinking about your own death or losing a loved one is not on anyone’s wish list, but you know what they say about death and taxes–it’s inevitable.

Securing a life insurance policy when you’re relatively young and healthy is ideal if you are responsible for other people and have the resources. If you are on your own, there’s really no point. When it comes to how much coverage you should carry, experts recommend a sum that is 10-15x your income. That’s likely a high number, but you can imagine how quickly that number will shrink when bills are due and life goes on. Ask yourself three questions:

Who depends on me?
How much can I afford?
How healthy am I?

Many companies offer life insurance to their employees, and that’s great, but it is usually insufficient for anyone who has other people depending on them for daily living expenses for an indeterminate period of time, such as a spouse, sibling or elderly parent. What about the mortgage, car payments, private school or college tuition, or possibly a wedding in the near or distant future? Basically, the more responsibilities you have, the more coverage you need.

My parents, Tom and Sandy, with their daughters, sons-in-law and grandchildren to celebrate their 50th wedding anniversary in 2013. Families sure can grow!

Talk to your agent about the different options of term, whole, and universal life policies to determine which would best meet your needs now and fulfill the needs of your dependents later.

Your financial and family situation will determine whether you need life insurance.
The younger you are the lower your premiums, but older people can still get life insurance.
Carry as much as you need to pay off your debts plus any interest.
Your policy’s payout should be large enough to replace your income plus a little to hedge against inflation.
from Investopedia

While we’re on the subject, I thought it would be fun (in a macabre sort of way) to share the lifetime odds of death for selected causes. The world is battling a pandemic at the moment thanks to COVID-19, so mortality and the fragility of life is on the forefront of every news report and social media post. Here are some statistics for other ways to die from the U.S. National Safety Council, based on data from the National Center for Health Statistics, 2017.

Photo by Carlos Pernalete Tua on Pexels.com

Airplane crash: 1 in 188,364

Photo by Dominika Roseclay on Pexels.com

Dog attack: 1 in 115,111

Lightning strike: 1 in 218,106

Accidental firearms discharge:

1 in 8,527

Cycling: 1 in 4,047

Car crash: 1 in 103

Y’all be safe out there and take precautions to look after your family, so you (and they) have one less problem to solve.

Month: August 2020

11 Tips from a Pro

99 Problems but Life Insurance ain’t One.