Five Insurance Tips for Five Insurance Types

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It occurred to me that I don't write about insurance very much. The main reason is that I think it is very boring. It's hard to get people excited about insurance.

On the other hand, insurance is very important. Perhaps the fastest way to bankruptcy is to not be adequately insured when something catastrophic happens.

However, insurance isn't all about saving yourself from these events. Since you have to pay premiums every month, you want to keep these expenses down. With that in mind I decided to come up with 5 insurance tips for 5 insurance types:

  1. Car Insurance - There are two secrets to car insurance. You want to protect yourself, your wallet, and earnings in the event of a big accident. Secondly you want to match the level of car replacement insurance with your car. If you have a clunker, you might not want car replacement at all, because it won't be worth the deductible. (Yes, I slipped in an extra tip. Don't tell anyone.)
  2. Renter's Insurance - I'll keep this short: Get it. I'm amazed at how many of tenants didn't have it. It is extremely cheap and covers a lot. Now when I get a new tenant, I have a talk with them about getting it if they don't have it. I tell them that I want their property to be protected and this is the best way to do it.
  3. Life Insurance - Understand the difference between Term Life and Whole Life. Know what your objective with life insurance is. My wife and I's plan with life insurance is to help the other financially raise the children. Because of that we got a 20-year term life plan that was relatively cheap. It protects again catastrophe and doesn't drain our wallet.
  4. Home Owner's Insurance - With regard to houses, separate the value of the house from the land. Buy appropriate insurance for replacing the cost of the house. This can be significantly less than what you paid for the whole property.
  5. Motorcycle Insurance - I thought I'd have a little fun and include a less popular insurance. I don't have a motorcycle, so I for this one, I reached out to Gerry Bucke, general manager at Bikesure. He said "Completing a motorcycle rider safety course can save you as much as 15% on your premiums."

There are many more tips on insurance and this is really just the tip of the iceberg. Maybe it's enough of a tease to make insurance a little less drab.

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Posted on May 7, 2014.

Use Terms and Conditions to Prevent Disputes

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If you are like me, you've scrolled past thousands of terms and conditions without reading them. If my website's traffic is any indicator, almost no one cares about the terms and conditions of this site. Nonetheless they are important for several reasons. Here's one very important reason: my advertisers require that I have one. I have to keep those people happy.

Terms and conditions and all the other digital paperwork are needed because eCommerce transactions are not as simple as walking into the local grocery store and picking up a loaf of bread and a quart of milk. When you go to a store, make a purchase, and walk out of the store, you probably disregarded some terms and conditions without knowing it. For example, you might have missed signs stating the refund policy or that the management reserves the right to refuse service to anybody. Those are terms and conditions in real time, and by completing a purchase, you have agreed to them. Last week, I was at Universal Studios in Orlando and I noticed a sign that said that by entering the park, I was granting them a license to use my likeness in their marketing. It made me wonder if a celebrity that endorses Disney can go in. Imagine the can of worms it would open up if Universal put out a commercial involving that celebrity.

Create Your Own Terms and Conditions

When you create your terms and conditions, you could review a dozen sites and "Frankenstein" your own terms and conditions. With any luck, the results will be better than they were for Frankenstein and his monster. At the very least there won't likely be any torches and pitchforks.

Now there's a online terms and conditions generator from companies such as Shopify. It would have made my life easier. If I were a small business starting from scratch, I'd start there.

Be Careful with your Terms and Conditions

When a purchase made through a website has more purchasing steps and nearly infinite space for them, the terms are more complicated. In fact, they are complicated enough to trip up large companies like Zappos who had its entire user agreement voided by a federal court. I highly recommend reading that article to avoid their pitfall.

Terms and conditions that are termed "browse wrap" have been thrown out of court, as in the case of Harris v. Blockbuster, for being what the court termed "illusory and unenforceable."

Cover Your Assets

Terms and conditions such as privacy policies, terms of use, terms of sale, and refund policies are meant to protect the sellers and service providers from losses. By clearly stating what you will and will not do, how you use the customer information entrusted to you, and what policies cover your activities on your website, you are limiting the financial harm that you might experience in a lawsuit brought by a disgruntled customer who feels wronged or injured by your company or the goods or services that you're selling. In a sense, such documents act like a fence setting out legal boundaries to your liability. They play a part in protecting you from litigation so long as you have fulfilled in good faith all your responsibilities to your customers. Of course, the definition of "good faith" in the case of a merchant transaction is open to interpretation.

Acting in good faith require some effort and transparency. This is why I have a "Quick Non-Legalese Version" section to start my terms of conditions. I want to make sure that I'm transparent. I recommend you do the same.

Quite literally, terms and conditions are cheapest insurance policy you can get. Don't be "Lazy" and put it off.

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Posted on April 4, 2014.

Funeral Insurance?

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When I wrote about doubling up on our life insurance last week, a reader emailed me asking about funeral insurance. I had never heard of the term. I figured he was simply talking about life insurance. Then he directed me to visit APIA for funeral plans. I did a little research and it seems like it is better known as burial insurance here. Tomato, tomahto... funeral insurance (or burial insurance) exists... I guess I learn something new every day.

PINNACLE LIFE Funeral Cover

So what's the difference between funeral and life insurance? I headed to Google to research the two. The biggest difference is probably the most obvious one, funeral insurance is more specialized. Funeral insurance will pay for a funeral, but you life insurance money can be used for anything. Why would you want the more specialized funeral insurance instead life insurance? There's one main advantage. Often there are no exams, making it easier to get insured. This is key for those who who may be in less than perfect health.

Why wouldn't you get funeral insurance? It can be much more expensive than life insurance. For that reason alone, it is often worth at least trying to get life insurance first. Also though you may escape the exam, if you disclose a health problem, you can be rejected.

Given my (knock on wood) good health, it seems like I'm doing the right thing sticking with life insurance. That said, my term life insurance is going to expire in 20 years. After that I'll have to look into funding my funeral from my own savings. If I'm super-rich, I'll opt to be frozen next to Ted Williams. If it's good enough for the Splendid Splinter it is good enough for me.

If I'm not super-rich, I'll probably go the cremation route. It may sound silly, but it's kind of irked me that if we keep burying people cemeteries will have to continue to expand as long as there's a human race. Unfortunately we don't have infinite real estate... so it is unsustainable.

The other reason to go the cremation route is that it is cheaper, which leaves more money around my heirs. It turns out that caskets and headstones are expensive... and I won't be alive to appreciate it.

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Last updated on January 12, 2015.

Doubling Up Our Life Insurance

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I recently wrote about out how I was looking into disability insurance. In that article, I made a mention that I really should review my life insurance. Why? Because with the birth of our second child our financial obligations have doubled. If either my wife or I died, the other would be left to support both of the children.

Not only that, but we have a few real estate properties. (It still feels odd to write that.) When we have tenants in all of them (and, more importantly, the tenants are happy) everything runs smoothly. However, sometimes tenants move on and we have to replace them with new ones. Then we have to start all over, not knowing what kind of people we are going to get. In the meantime, we still need to make the mortgage payments... at least for the next 15 years until we have them paid off. After that our obligation is reduced to upkeep and taxes, but they aren't exactly zero. One person working full-time and taking care of the kids has enough to do without having to deal with the hassle of managing multiple properties. Life insurance could cover the cost of a rental management company to ease that burden.

The biggest question is whether to get whole life or term life. Whole life is when you have life insurance for the rest of your life. It can get expensive, because as long as you pay the premiums, they have to pay out the benefit. Term life is life insurance for a specific term. For example, we might get life insurance for 20 years. At that point our children will be close enough to being able to take care of themselves (we hope!), so we don't need the same coverage to raise them.. I prefer term life. It is cheaper and fits my needs of covering our obligations. Life insurance terms and details can get confusing, so I like the simplicity of term life as well.

When we had our first child, I had to rush to get life insurance. It was one of the last things I had thought about and it hit me - this is not something that I can procrastinate about. I'm not sure if I got the best deal. This time, I can time my own advice: always compare life insurance and perhaps save some money.

I'll leave you with a final thought about the term life insurance I chose. It is one of the few times that I'm happy to pay for a service that I hope I'll never benefit from.

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Last updated on January 23, 2014.

Looking into Disability Insurance

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There are circumstances in your life that require obvious change. For example, when we had our first child, it was clear to me that we should increase our life insurance. (Maybe it isn't as obvious to everyone else and it is just me.) When you buy a car, you have to get insurance in many states. Even people know that at some point they are going to die and need to prepare themselves for that inevitable "change" (not to get all tarot-card-y with the "death equals change" thing).

I can't think of the circumstance that pushes someone to get disablity insurance... except for when it is too late. When you get your first job they don't say, "Don't forget to get disability insurance. When you get a new house, I rarely hear the advice, "Get disability insurance, so you can afford mortgage payments."

Aside from the Aflack duck, I don't see a lot of advertisements pushing me to get disability insurance. Maybe I'm not looking hard enough, because it seems to be one of those products you'd see advertised everywhere.

I earn almost 100% of my income at a computer. At first glance, it doesn't seem to be the type of occupation that requires disability insurance. Even someone with Stephen Hawking's motor neuron disease could probably physically do what I do with the advances of computers today. However, I am reminded of a colleague, Ben from Money Smart Life who came down with carpal tunnel syndrome a few years ago. While he was able to continue to blog with Dragon NaturallySpeaking software, I imagine it wasn't easy.

Ben and I have it fairly easy being bloggers. Just about every other job under the sun is more physically demanding, all the more reason for people to have good disability insurance.

Michelin has the great tagline that "so much is riding on your tires", but if you stop to think about it, just about as much is riding on your income. If you go with GoodYear or Firestone instead of Michelin tires, you still have something reliable, but how many of us are operating our financial vehicle without anything?

One reader recently emailed me suggesting that I find out more about Suncorp Income Protection, but that seems to be an Australian-based company and probably not a great fit for me in the United States.

While I am at it, I should take stock of our life insurance now that we have a second child.

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Posted on January 17, 2014.

8 Tips Everyone Should Know About Home Insurance

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[The following is a guest post by Annie Davis.]

So you've finally made your first huge purchase — a home. Congratulations! What's the first thing you should do? Protect your property, of course. Purchasing home insurance is the best way to protect yourself against the elements and other disasters. There are a few things that everyone should know about it, though. Here are a few tips that everyone should know about home insurance.

Understand What it Covers

The very first thing you should do when looking at an insurance policy is find out what the insurance policy covers. The policy, of course, covers things such as fire, storms, theft, and more. If you're displaced from your home, you'll be covered. Did you know that your homeowner's insurance can cover things outside of your house?

If something is stolen from your car, don't depend on your auto insurance. Your home insurance policy will likely cover anything taken from your car.

At the same time, understand what your policy doesn't cover. Most policies won't cover flood or earthquake damage as a standard item if you live in a high risk area. These scenarios requirepolicies that must be purchased separately. The same could apply for anything else, such as jewelry, furs or artwork.

Check to see if your insurance company offers these types of policies, and, if necessary, purchase them separate from your home insurance.

You Should Shop Around

Shopping around for your policy is important in finding the most coverage for the best price. If something were to happen, you're going to need someone you can depend on, so make sure to go with an agent that comes highly recommended. There's nothing worse than experiencing a tragedy and having an agent come out and tell you that you aren't fully covered.

How to Reduce Your Premium

It's important to maximize your discounts on your insurance premiums. Are you aware of all the different ways you can get a discount on your home insurance? If your property is gated, you can get a reduced premium. If you install other security measures, such as deadbolts, security cameras, alarms, or anything else, you can get a reduced premium. Adding an alarm that can directly communicate with the police and fire departments can earn you up to a 20 percent discount.

The less risks you have, the better. Do you have a pool? Put a fence around it. Little things around your house can lower your premium. Once you've installed all the security measures that you can think of, check out homeownersinsurance.com to compare rates and get quotes.

Don't Wait to File a Claim

Examine the policies to determine the time limits to report any damages. The last thing you want is to wait too long and not be covered. Commit the time limit to memory. If you decide to report the problem after the date, you're completely out of luck.

Note the Limitations

When signing up for a policy, it's important to make note of how much the policy covers. You'll be out a serious amount of money if the item lost or damaged exceeds the amount of money that the policy covers.

Keep Detailed Records

It's extremely important to keep detailed records, including receipts, contracts and appraisals. If you have a smartphone, you can use an app to record phone calls. Keep digital copies if possible, they're small and can be backed up remotely. The last thing you want is for a claim to not pay out based on your lousy records.

If you do decide to keep physical copies of everything, make physical backups of everything. Store them safely in fireproof cabinets or safes. In the event that something happens, you want them to be retrievable.

Bundle Your Policies

Consider bundling your policies. If you have multiple policies with one company, you could be eligible for a discount. If you hold these policies for three to five years, you could be eligible for a five percent discount, and if you hold the policies six years or longer, you could save up to ten percent on your premium.

Pay Attention to Inflation

It's important to keep up with inflation. The same house that cost you $75,000 a decade ago may cost you $110,000 to replace today. Talk to your agent to determine whether the coverage amounts still apply, and add any improvements to the total.

No matter if you're a first time buyer or have owned multiple homes, these tips can help everyone. Utilize them and get the most out of your coverage for the best price.

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Posted on October 21, 2013.

Today’s Challenge: Do A Whole Home Audit

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Have you ever went around your home and tallied up how much your possessions are worth? Yeah me neither. I keep saying that I should, but I never do.

We both should do this as soon as possible.

Why? If there's a fire in your home and need to place an insurance claim (such as after getting your home insured with HBF), you'll be able to show the insurance adjusters, more or less, what you lost.

If it's Laziness stopping me from documenting everything, I need to stop living up to my name. When I first wrote about emergency preparedness back in early 2008, I mentioned digitizing your media and uploading them to the Internet. At the time, no one had heard of Android and the Flip video camera craze was just starting to gain interest. Today, it almost everyone has access to a video camera (if even on their smartphone to record a video tour of the house. It probably would take 10 minutes to get most of the big stuff.

If there's any difficulty it comes with the little things. For example, flipping through my sports card collection certainly takes some time. Women might find that documenting their jewelry is the same way. Fortunately, the 80/20 rule applies here... 80% of the value of my card collection are in only 20% of the cards. Okay, I lied. It is probably closer to 99.9/0.1, but people are more familiar with the 80/20 rule.

Once you have the video, you should upload it to a video to a cloud service. A memory card with a video of your stuff is no good if it is charred to smithereens in a fire. A private YouTube should do the trick. If you are technical-minded and want to pay a few pennies for you could use something like Amazon's Glacier (which has "annual durability of 99.999999999%"), but it will cost you a couple of dollars a month depending on how much data you have to upload.

With video evidence, it's not just my word that I lost a Kevin McHale rookie card in a fire... it's very good proof. Now, I just have to resist the urge to look it up and find that it is only worth about $3.

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Posted on August 12, 2013.

It’s Time for the Semi-Annual Insurance Check-up

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Victoria Secret isn't the only organization putting a semi-annual event together. It's time for the semi-annual insurance check-up at Lazy Man headquarters. Admittedly, it's slightly less sexy than Victoria's event, but our budget for pulling it off is around $15, enough for a couple of Subway subs and some drinks.

Every 6 months (or so), my wife and I gather to review our insurance policies. It's about as much fun as it sounds, which is "not very." It's not like doing a quarterly net worth update and seeing progress towards our savings.

For many people, a semi-annual insurance check-up is probably an easy thing. You've got your home, car, life, maybe an umbrella policy. You probably get health insurance through your job. Maybe it's just me, but I think we have it a little more complicated than most. We have:

  • Home Insurance - As we own three properties, we have one policy for our primary residence and two more landlord policies protecting the other properties. Even when it is one type of insurance, the various requirements are completely different.
  • Car Insurance - We currently have three cars, which is really one too many for our needs. That extra car costs us more with insurance payments and it's on the docket to fix that soon.
  • Life Insurance - My wife gets some life insurance from the military. We were going to get her more, but it seems that insurers didn't want to give a policy to someone who was pregnant with Little Man. Also since weight is a factor in the premiums, it just seemed like the wrong time to add to it. I was able to get life insurance for myself. Now I'm thinking about upping it, but I wonder if that will trigger a new exam and put me on higher premium level. That's a phone call to make.
  • Umbrella Policy / Business Insurance - When I was freelancing for a company they required me to get this insurance to cover themselves in case I purposely did something stupid. I'm glad they did. It doesn't that much and it's nice to know that it is around.
  • Diamond Ring Insurance - This is actually just a rider on our property insurance, but it's another thing that needs to be insured.

The last one was particularly interesting as during one of these checks we found that we had been paying two companies to insure my wife's diamond ring. She thought it was her responsibility to pay for the insurance and opened up something. I had already put it on property insurance for the condo that I had owned when we came into the marriage. It was with two different companies so it wasn't something a company would have picked up on.

Typically our review isn't much more than taking the above inventory and then calling our insurance company to run through everything and see if we have any gaps somewhere. We're down to three insurance companies for everything, but hopefully we'll consolidate further so that one representative can give us a complete view in the future.

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Last updated on July 3, 2013.

Should You Have an Emergency Charity Fund?

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[Editor's Note: I published this originally in June of 2008. It's helped me save money to give Haiti, Japan, Hurricane Irene victims, and that Sandy thing that people are talking about today. Even if you put $3 to $5 aside a month for charity disaster relief, you can make a big difference.]

It's no secret that one of my favorite blogs is Get Rich Slowly. Yesterday there was an article about how to coping with financial disaster. (My short answer see #14 of 16 Thoughts on Oprah's Stanford Commencement Speech... Grieve properly, attend to the situation at hand, and get back to what was important before the crisis.)

With more and more natural disasters striking the United States, it occurred to me... should I have an emergency fund to donate to charity? I typically focus my charitable efforts on one effort... the American Cancer Society... in honor of my dad. Perhaps that doesn't make sense anymore. Perhaps I should "plan" for one or two disasters each year... whether it be wild fires, flooding, hurricanes, or tornadoes.

I think in the future, I'll look to divide my charitable contributions in three ways... I will still support the American Cancer Society, I don't see that ever changing. However, I will divide the other half of my charitable contributions to charities are more directly observable by me. I'm thinking that one of those sites is Kiva.org. The other would be this emergency fund for natural disasters.

I suppose there's no right or wrong answers when it comes to charity and giving, but as always I'm curious to hear what you think. Do you have an emergency charity fund?

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Posted on November 5, 2012.

Ask the Readers: Umbilical Cord as a Form of Health/Life Insurance?

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I have mentioned it a couple of times previously, but in a few months, if all goes well, I'll be the father to a baby boy. This brings a bunch of difficult questions like whether to get a Patriots or Red Sox diaper bag and what is the proper age to introduce him to Firefly/Serenity and Buffy the Vampire Slayer? (It was Patriots in a landslide and the Joss Whedon masterpieces is still open for debate.)

However, there's one question that I never anticipated... should I save and freeze the umbilical cord for later? My wife and I didn't even freeze our wedding cake for our anniversary and now people are asking us about freezing human flesh? Fortunately, they won't be using my freezer. I don't need that mess getting in my ice cream.

I'm new to this, but the idea seems to be that you freeze the umbilical cord and giving you access to stem cells in the event that they help you later should you develop a medical condition. I haven't done much research on the topic. I have only a small knowledge of stem cells and I couldn't tell you what they've been shown to help or where it is headed. What I do know is that the stem cells "could" be helpful not only to our baby, but for me and/or my wife as well. It's not like health insurance in the form of covering medical expenses, but it has the potential ensure you live a longer life.

The price of this protection is around two to three thousand dollars upfront and anywhere from $125 to $250 a year for maintaining this umbilical cord in a frozen state. Perhaps there are cheaper prices if I shop around, but I'm quoting the place that contacted us.

It's very rare that I instinctively don't know which way I'm leaning on an issue. This is one of those cases. Perhaps when I get more information the decision will be easier. I know that a majority of society pokes fun at those who have their heads or bodies frozen with the hopes of being thawed out later. However, I think George Carlin had it right:

"I want to live. I don't want to die. That's the whole secret of life...not dying! I figured that [expletive] out alone in third grade...

Leave my plug alone. Get an extension cord for my plug. I want everything you got, tubes, cords, plugs, probes, electrodes, IVs. You got something (click), stick it in me man. You find out I got a hole I didn't know I had, put a [expletive] plug in it."

With that in mind, maybe I am leaning towards doing it. Give me your thoughts in the comments.

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Posted on June 5, 2012.

 
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