Lazy Man and Money

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.

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

Photo by James Thompson

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 require policies 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.

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.

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.

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?