Is A Catastrophic Insurance Plan Right For You?

In this down economy, it may seem practical to choose a health insurance plan that has the lowest monthly payments. However, plans that have the lowest monthly premiums also typically have the highest deductibles. For some individuals and families, this may be a good option but for others it could lead to a medical and financial disaster.

“Catastrophic” and “High Deductible” health plans essentially refer to the same plan. It is sometimes called “catastrophic” because it pertains to the occurrence of a catastrophic event such as an illness or a debilitating injury. It means that during this event, you will at least have the minimum health insurance to help you cover the high costs of hospitalization and recovery.

To determine if a high deductible or catastrophic health insurance is right for you, it is important to understand what it is exactly and who benefits most from it.

How Does Health Insurance Work?

When looking into a health insurance plan, it is important to look at the premium, deductible and copay. The premium is the monthly amount you pay to your insurance company. The deductible is the amount that you will cover from your own money before an insurance company is required to pay for your accident or illness.

When it comes to copays, there are generally two types, there is a big difference between a copay and coinsurance. The first is a nominal fee ranging from $12 to $25, but can sometimes be more or less. This initial copay is the beginning of the rest of the payment process. The second type is based on a percentage. Also called coinsurance, this type of copay can be on an 80/20 basis, but again there is a range in this as well. This means that once you have past your deductible, your insurance company will pay 80 percent of the bill while you are liable for the 20 percent.

It is important to remember that a health insurance company is a business that operates on maximizing its profits. To do this, it will attempt to collect as much money from you while paying as little out as possible during an accident or sickness.

However, how will they entice you to go with their health insurance company if you are unable to afford their monthly premium? So, these companies will lower your monthly premiums but will require you to pay a higher deductible. This means the company does not have to pay anything out unless a high deductible threshold has been met.

When choosing the right insurance plan, it is important to determine the “risk” you are willing to take on. This risk is assessing the number of times that you will dip into your insurance plan during an illness or accident. It is also how much you are able to afford to pay out of pocket before reaching your deductible threshold.

So, a plan with a lower deductible but a higher premium means that the insurer is obligated to pay more on your behalf but you are paying more monthly. This means that you believe that you have a high incidence of getting sick or getting into an accident that it is worth to pay the higher premium.

In the case of a catastrophic or high deductible health plan, this is the opposite. You will pay lower premiums yet the deductible is much higher. This means that you believe that your incidence of sickness or getting into an accident is fairly low so you are willing to save more by paying a lower monthly rate. This also means that when you get into an accident, you will have to pay more out initially until the deductible is reached and the insurance company is obligated to pay.

Let’s Look At the Numbers

To determine and better understand the difference between a typical insurance plan and a catastrophic insurance plan, it would be best to compare them with some numbers. In this sample scenario, you had to go to the doctor for a visit and a prescription.

If you had a typical health insurance policy your monthly premium is $800 while your deductible is $400. Since you had to visit the doctor, you had to copay an amount of $30 and a prescription fee of $20 and the rest is paid by your insurance company. For that month, if you did not see a physician anymore, your fees would amount to $850.

On the other hand, if you had catastrophic health insurance, with a monthly payment of $400 and a deductible of $2,400 in the same scenario, you will have to pay more for your doctor’s visit which could amount to $100 or more and the prescription which is going to cost you $150 since you do not have any prescription coverage. Since your deductible is so high, you will have to pay for the entire visit out of pocket. Your total fees for that month are $650.

If you only visit your doctor occasionally, then the catastrophic health plan is a much better deal. However, if you end up in an accident that requires expensive surgery, then those copays are the least of your worries. With a high deductible health plan, you will have to pay $2,400 and 20 percent of the subsequent medical bill which could possibly reach the thousands. But with a regular health plan, what you pay is far less.

There is so much variation in insurance policies and this is just a quick example, so don’t get too caught up in this one example since every single insurance policy will be different. It is best to sit down with your own insurance options and figure out best and worst case scenarios for you and your family to help you better decide what health insurance policy will be best for you.

Will A Catastrophic Health Plan Work for You?

For individuals and families who are relatively healthy and do not require numerous visits to the doctor, prescriptions and stays in the hospital then a catastrophic health plan may be more ideal. However, for individuals and families who have many medical challenges and are easily susceptible to sicknesses and accidents then it would be best to choose a regular health plan instead.

Personally I have been going with high deductible plans. There was one year that we actually had a few emergency room visits and we ended up hitting our $5,000 deductible, but the other years have been kinder to us. It is hard because if we had that magic crystal ball and could see the future we could more easily decide what health insurance policy would be best, but since we do not we have to make an educated guess at it. I really like catastrophic health insurance, but I always have the extra money on had to take care of emergencies if and when they do arise. I also have a health savings account set up to help me along the way.. But it all depends on your own personal and family situation. You really have to sit down with a calculator or spreadsheet and figure out for yourself what will work best for you.

What has been your experience with picking health insurance? What kind of insurance policy do you go with, or do you just go without?

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But what is a CLUE report?

Most people are clueless about there CLUE report, hehe see what I did there.

CLUE stands for Comprehensive Loss Underwriting Exchange, and this report gives details dating back seven years history of claims with your insurance company. Why does this matter? CLUE reports are used by insurance agents looking to consider new clients. Used during the underwriting process, this report helps in determining the risk of an individual client. This report can affect you if you make too many claims too frequently. A common example of how the information in the CLUE database can come back to affect someone is when a person makes a claim with an insurance company, then proceeds to switch companies without notifying the new company of any of their previous claims. The new company can search the report database and quickly find deception, in turn denying the person insurance on the grounds of false information being provided to them.

How to access your CLUE report?

You actually have two ways that you are entitled to obtain free insurance reports, the first one being an adverse decision scenario in which an insurance provider denies insurance based on information from the consumer report. When a situation like this occurs the insurance company is obligated to inform you on how to obtain a free copy of the specialty report.

The second way is to take advantage of your right to obtain a free CLUE report. LexisNexis is the place to go for this. They are a consumer reporting agency that gathers all of this information and provides it to the insurance providers as well as other paying customers, but you can get a free copy of the report they have on you here.

You may be wondering what constitutes an “adverse” decision, so here’s a couple of scenarios:

1) You apply for automobile insurance but are denied because your credit history is not adequate enough for the insurer to assess and rank your level of risk.

2) You apply for homeowners’ insurance but are denied insurance because of claims found in your CLUE report.

Along with these two examples are numerous other situations that would fall under adverse action and enable your right to a free copy of your specialty report.

As far as rights, with the CLUE report you have the same abilities as with your credit report. The one free copy per year that you are entitled to as mentioned earlier is thanks to recent amendments to the FCRA (Fair Credit Reporting Act). You also have the right to dispute grossly inaccurate or incomplete information found in the CLUE report. Many states have passed laws in regards to consumer concerns over CLUE reports and insurance scores. These laws vary by state so if you are interested in getting more information you should contact your state insurance commissioner.

The CLUE database and report is for the most part unknown to the general public. Unless you ask about it, your insurance agent or provider will most likely not volunteer the information. While your insurance provider is not under legal obligation to inform you of the database, it is something that you should be checking out yourself as a consumer. Take the action to know what is out there about you and get a CLUE.

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Life insurance tends to get a bad reputation even though most people have a legitimate need for coverage. The main problem is that there are many different types of life insurance and almost all policies are sold by someone working on commission. This scenario is perfect for abuse when you have people pushing a product to make some money and ends up caring more about the commission than finding the right amount of coverage with the right type of policy. Because of this you’ll often hear stories about how someone got sucked into a massive whole life policy at a young age, or signed up for million dollar term life when they don’t even make $50,000 a year and don’t have any kids.

These stories may be fairly common, but it doesn’t mean life insurance is a bad product or that you should shy away from determining how much life insurance you need. If you understand the different types of coverage and calculate how much you really need you’ll be able to get the protection you desire without feeling ripped off for buying too much or getting into the wrong policy.

Do I Even Need Life Insurance?

Before going on to find out how much life insurance you need you must first determine if you even need it. If you ask someone who sells insurance for a living they will tell you everyone needs life insurance regardless of what their situation is in life. This just isn’t true. There are plenty of people and situations where life insurance simply doesn’t make sense. So, how do you know if you’re someone who needs life insurance or not? Here are a few general rules to follow:

You probably need life insurance if:

• You are married.
• You have children.
• You have a desire to leave a beneficiary something upon your death.

You probably don’t need life insurance if:

• You are single.
• You are older and your children are no longer dependent.
• You are married but only your spouse earns an income.

Now keep in mind that these are generalities and not black and white questions. There are situations where there may be a combination of factors going on that warrant coverage even if the general consensus says otherwise. To put it simply, ask yourself this: If I were to die, would that place a financial burden on someone else? If you answered yes to that question that’s a pretty good indication that you need some sort of life insurance.

The Different Types of Life Insurance

Once you’ve determined that you could use some life insurance you’ll then want to consider the different types of life insurance options. To keep things simple, life insurance is generally broken down into two forms: term and cash value. Term life is just what you’d suspect. It’s an insurance policy that is only effective for a specific term and when that term is up the coverage ends. Policies that have a cash value come in a few different forms, but their goal is the same. They provide a death benefit just like term life but they don’t expire after a certain number of years (as long as you stay current on premiums) and a portion of your policy premiums build up cash value over time.

To get a better understanding of the different types of policies let’s look at some of the details of each:

Term Life -  This is the cheapest way to obtain life insurance. You select the length of coverage, typically 5, 10, 20, or 30 years, and make premium payments as long as the term is in effect. The premiums typically remain the same for the life of the term and when the term is up you stop making payments and the death benefit goes away. Term life is cheap because the policy only lasts a set number of years and doesn’t have any sort of cash value or investment option. Term policies are best for those who need coverage for just part of their life such as while they are married and in their prime earning years or while there’s a dependent child in the house.

Whole Life - Unlike term life insurance whole life is meant to provide a death benefit for someone’s entire life as long as the premiums are paid. Because these policies are effective in most cases until someone dies the premiums are much higher since the insurance company will almost certainly have to pay out a death benefit at some point. Whole life also has a cash component that will take part of each premium payment and set it aside in a separate account earning a set interest rate. Because of the significantly higher premiums and low rates of return on the cash portion whole life is almost never recommended for young people simply looking to protect their family. Like term life, generally the premiums remain the same for the life of the contract.

Universal Life – Similar to whole life in terms of having a cash component and still unlike term life, universal policies provide a little more flexibility over whole life. With universal life you can usually increase or decrease the death benefit at some point in the future and you may have a few different investment options for the cash value component of the policy.

Variable Universal Life – Here’s where things get a bit complicated. Similar to the other cash value policies you pay a higher premium than term life and some of that goes into an separate investment account. But instead of generally earning a regular interest rate you have the ability to invest that money into a all sorts of things such as mutual funds, putting your money at risk. These investments also increase the total fees paid which hurt your returns but help pad the insurance salesman’s wallet. These are the policies that have really given insurance a bad name in recent years and since very few people have a situation in where this type of policy can help you should probably think twice if someone mentions a VUL to you.

Calculating How Much Life Insurance You Need

So, you’ve determined that you do need life insurance and have identified the type of policy that’s right for you, but how do you come up with the magic number for how much coverage to have? It’s not as hard as it sounds so let’s walk through the process.

First, take stock of any life insurance policies you already have. Maybe your parents took out a small whole life policy on you when you were just a child or maybe you already have some coverage through your employer. While you’ll want to take any existing policies into account, don’t hold them with as much weight because like with your employer’s insurance it may disappear if you change jobs, or the little policy your parents took out on you might be too expensive to keep paying premiums on for the provided death benefit so you may opt to cancel or cash it out.

Next, look at your other assets that would be given to your beneficiaries upon your death. If you have a 401(k), IRAs, property, or other assets that have your spouse or kids listed as beneficiaries they will receive the bulk of those proceeds upon your death just like they would from an insurance policy so these funds may offset some of the coverage you think you need and can help you keep premiums down.

Using Income Rules of Thumb

Now it’s time to look at how long you need coverage. We’re going to assume you’re looking at term life which is the most common so you probably want to have coverage while you have dependent children, so you’re usually looking at a 20-30 year term. For sake of calculations we’ll go with 20 years. If you need coverage for 20 years you’ll want to start with the worst-case scenario if you were to die in that first year. How much money would your spouse and/or dependents be missing out on if that were to happen? If you make $50,000/year the easiest way to figure that would be to take $50,000 x 20 years, or $1,000,000. That means if you were to die within the first year of the policy your beneficiaries would receive enough money to directly replace your lost income for the next 20 years.

That’s a good rule of thumb, but it’s not always as simple as that. For example, your income probably wouldn’t remain static for the next 20 years and you’d probably receive pay increases over time. On top of that you want to factor in inflation. Remember, $50,000 in year 1 is going to be worth a lot more than $50,000 in year 20. So, maybe you take your replacement income and come up with an average inflated number to use for your calculation. If you make $50,000 today and expect your pay to increase with inflation you might expect your income to be upwards of $90,000 by then. Without getting too complicated you could then use these two numbers and split the difference for an average income over that time and maybe use $75,000. So with $75,000 x 20 you get $1.5 million.

Remember what we talked about above with looking at existing policies and assets? Well, if you have say a $50,000 policy through your employer and $200,000 tucked away in retirement accounts and other assets you could reduce your life insurance death benefit accordingly and save on premiums. So instead of $1.5 million you may only want to get $1.25 million in coverage. There is no right or wrong way to figure this in, but keep that in mind so you can balance your true death benefit needs and keep premiums as low as possible.

Using a Bare Bones Approach

The income rule of thumb above is great for maximizing your death benefit to ensure your beneficiaries don’t miss a beat, but covering two people to match their income for the length of the term may put the insurance premiums out of reach for many. That’s ok. What a lot of people do instead is take a look at their financial situation and determine what the bare minimum of coverage should be so that if something were to happen your spouse or children aren’t faced with a financial hardship. For most families this means keeping up with the mortgage and car payments, paying off other debts, and putting some food on the table.

So, that means you can determine how much coverage you need so that you can alleviate those concerns for your loved ones. Assuming the worst-case again where you die in the first year of the policy you should add up all of your current debts. Say you owe $150,000 on your current mortgage, owe $15,000 on a few cars, and have $5,000 in credit card debt. If you were to die your spouse and children would be left to live on just one income and still need to keep up with all of the above debt payments. But you can add up those debs to get a bare bones number: $150,000 + $15,000 + $5,000 = $170,000. To be safe, you may want to tack on another $10,000 that would be used to cover funeral expenses. So, here we’re at a $180,000 death benefit.

To understand how this may be all you need, consider what happens if you were to die in the first year. That $180,000 would be enough to pay off the house, the cars, wipe out the credit card debt, and pay your final expenses. With all of those things eliminated your spouse doesn’t have a mortgage, car payments, credit card bills, or any of that to worry about. As long as they are working there’s a good chance their single income will be more than enough to live off of.

Making Sure You Can Afford Life Insurance

You’ve seen the two extremes in the examples above. You can go all out and give your beneficiaries complete replacement income or you can get just enough coverage to eliminate your existing debt so they don’t have to worry about trying to make the payments when you’re gone. It goes to show you that there’s no right or wrong answer when it comes to determining how much life insurance you need. Your priorities, financial situation, and use of the death benefit will determine how much you should have. For some it might be a lot, but others may only need a little. So, don’t get caught up on numbers people throw out there as must-haves when it comes to insurance. It’s up to you to decide that.

But whatever you decide it’s important to make sure it fits within your budget. If your premiums cut into how much you’re able to put into an emergency fund, save for retirement, or pay down your debt, you’re buying too much insurance. Those items should take priority and insurance should be something that you can comfortably add on to your monthly expenses without negatively impacting the other areas of your budget.

To give you an idea, term insurance is much more affordable than you may think. For example, my wife and were shopping for policies and for non-smoking 30 year olds we were looking at $500,000 20-year term life policies around $240/year or $20/month. 20 bucks a month, that’s it! When you look at how much you might spend on things like cell phones, internet access, your daily Starbucks and so on, it really puts things into perspective. It really wouldn’t cost much to make sure our family is taken care of if something happened one of us.

But insurance premiums vary greatly, so the only way to know how much it will cost is to get a quote. If you’re curious as to how much life insurance will cost you, get a free quote today.

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Particularly under the financial constraints faced by many as a result of the economic slowdown that began in 2008, there is a temptation to cut back to lower your expenses by decreasing what you spend on life insurance, health insurance, property insurance, or auto insurance. Even when times are tight, maintaining quality coverage in each of the above areas is critical because we can’t predict the future and it just takes one accident or sickness to create what could be a lifelong financial crisis.

Life Insurance

This type of policy is the most often overlooked and can be the most critical when needed. While nobody wants to think about their own mortality, the reality is that people experience unforeseen premature deaths regularly. When such a tragedy occurs and the deceased does not have life insurance, the financial burdens that are created for those left behind compounds the devastation. Funeral arrangements alone can be quite expensive, but the lost income is the source of the real hardship, particularly if the deceased was the primary breadwinner. Losing that income could devastate your spouse or kids.

While there is debate about when one should obtain coverage, the latest you should wait to buy life insurance is when you have children. Providing for your children in case of death is crucial to ensure they will be cared for if tragedy strikes. For others, if one half of a couple is responsible for the bulk of the financial responsibilities, that is when that individual should obtain coverage. The next step is to then find out how much life insurance you need.

People often assume that if you’re young and single that life insurance is a waste. This isn’t entirely true. While it’s true that it isn’t as important to have coverage if nobody relies on your income, the other consideration is the cost of obtaining insurance at a young age. The younger and healthier you are, the less insurance will cost and the easier it will be to get. So even if you’re single and 25, if you think that getting married and starting a family will be in your future, it might be worth locking in coverage at today’s rates while you’re young and healthy.

Health Insurance

The views on health insurance are as diverse as the population, particularly given the rampant politicization of the subject. For many individuals, obtaining health insurance is directly tied to their employment. The options offered by the employer usually end up being the only real option because private insurance can be very expensive. Even in this context, it is important to ensure that you have comprehensive coverage.

Many people take the attitude that if they do not have access to insurance through an employer, the cost is too high to even consider getting insured. This group understands that even basic emergency care can run into the thousands if they become seriously ill injured. As emergencies rooms do not turn any away, these individuals take the risk that they will either “worry about the bill later” or that they will simply not pay it. The problem with this approach is that the financial repercussions of an unpaid medical bill can be severe. The cost of insurance premiums for basic coverage is relatively manageable when compared to the negative consequences of needing care without insurance.

To be sure, if you’re unemployed or underemployed, finding room in the budget for health insurance premiums seems like an impossible burden. It is still worth shopping around to see what’s available, especially if you or your family it in a high risk situation when it comes to health. At the very least, if you must go without insurance, it’s vital that you at least take part in preventative care. Seek out clinics that treat the uninsured and get your regular checkups and exams.

Property Insurance

For all but the wealthiest individuals, a house is probably the single most valuable asset that they own. Protecting that asset means obtaining comprehensive property insurance that covers both internally and externally originating problems. This means your policy needs to cover fires that are a result of old wiring within the home as well as fires that may be caused by lightning or a fire that spreads from a neighbor’s house. Likewise, a comprehensive policy will protect against water damage resulting from a frozen pipe and damage done by a burglar breaking into the home.

One of the appealing features of most homeowner’s policies is that it is relatively inexpensive to add riders for specific pieces of personal property. For example if you own expensive jewelry or artwork, these items can be covered by the homeowner’s policy for a nominal additional fee. It is important to add these items because they are not automatically covered. Also, if you have a lot of valuable electronics or equipment for a business that you run out of your home, talk to your agent to make sure you are properly covered. If you aren’t, you could find that if disaster strikes you end up only having enough coverage to rebuild the home, not replace the tens of thousands worth of personal items.

Here are a few tips to help you save on homeowners insurance.

Auto Insurance

This is the type of insurance subject to the greatest variability in cost. While the cost of auto insurance is largely driven by your driving record, it is still important to do some price comparisons before settling on a provider. Even after this is accomplished, checking every few years is advisable. While many people believe the most important part of auto insurance is its ability to repair the car or the car of the other driver in the case of an accident, it is actually the liability protection it offers that is most critical. In an auto accident in which one is at fault, the greatest liability comes from the injured drivers’ medical bills or a potential wrongful death suit. Making sure you have coverage through a good company and have enough liability coverage makes all the difference in the world.

Even when facing financial pressures, maintaining each of the above types of insurance is critical. Creating a sound financial plan is more than cutting spending and saving money. Insuring everything that you’ve worked so hard for, that can be taken away in a blink of an eye, is just as important.

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As with most insurance policies, you hate to spend money on the premiums for years and years while never making a claim, but you are so incredibly thankful if you do ever have to count on making a claim. It could mean the difference between being financially unaffected and bankruptcy.

What is an Umbrella Policy?

A personal umbrella policy is additional coverage that goes above and beyond what your homeowners and auto insurance policies cover. Think of it as a protective umbrella that will pick up the damages once you have exhausted your coverage of those policies. Umbrella insurance provides broad insurance beyond traditional home and auto. It provides additional liability coverage above the limits of homeowners, auto, and boat insurance policies. It can also provide coverage for claims that may be excluded by the primary policies. These may include, but are not limited to: false arrest, slander, libel, and invasion of privacy.

How Umbrella Insurance Works

Let’s say that you’re having a 4th of July cookout with some neighbors, and one of your neighbors suffers a major injury while in your home. You don’t think much of it because you know that your homeowners policy covers liability up to $100,000. But to your surprise, the neighbor is suing for $1 million in damages. How on Earth will you ever be able to come up with another $900,000?

If you don’t have an umbrella policy, you could find yourself in a very ugly situation. But let’s say you had the foresight to purchase a $1 million umbrella policy. Guess what, you’re in luck. Your homeowners policy would pick up the initial $100,000, and the remainder would fall under your umbrella. This could save you from losing almost everything you’ve worked your whole life for.

It is also important to realize that this type of policy works for auto accident claims as well. We all know how dangerous the roads are, and most people only have a few hundred thousand in liability coverage through their auto policy. Just a seemingly small accident can do a great deal of damage to the occupants of another vehicle that leads to a potential significant lawsuit. Are you willing to share the road with all those crazy sue-happy drivers with only $200,000 in liability protection?

How Much Does Umbrella Insurance Cost?

Most people just assume that since the coverage amounts are typically in the millions that it would simply be too expensive to purchase. This is generally not the case. In many instances you can obtain $1 million in coverage for just $200-$300 per year. Think about that–the annual cost of a million dollars of coverage is little more than what you spend on a few utility bills. Sure, you may never need it, but if you ever do, you’ll wish you had it.

Where to Get Umbrella Insurance

You usually never have to go beyond your own current insurance provider. The first place to check is with your homeowners insurance provider and see what they offer. Even if you don’t own a home, or want to look for other options, I’d check with your auto insurance provider. I use Liberty Mutual for my auto insurance, and they also offer an umbrella policy. The last time I got a quote for coverage through them they had an annual premium of $250 for $1 million in coverage. You can also look for coverage elsewhere, so there is nothing stopping you from shopping around. But keep in mind that having multiple policies with one carrier may provide additional discounts.

How Much Coverage?

This answer will be different for everyone, and due to variances in state laws regarding what assets may not be subject to seizure,  it is impossible to say that you should have a specific amount of coverage. This is where it pays to speak to an attorney. Even so, there is a general rule of thumb that suggests that you should have coverage equal to your net worth, rounded to the next million. So, if your net worth is approximately $600,000, you should err on the side of caution and have a million in coverage. Granted, some assets may be protected from lawsuits  in your situation or state, but given how inexpensive the premiums are relative to the coverage, it is better to be slightly over insured in this instance.

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There are several reasons why people who rent an apartment or a home should look into renters insurance. It offers protection on several different levels that can come in extremely handy when an unfortunate incident occurs to a rented property.

Property Protection

Renters insurance offers protection for property such as furniture, electronic equipment and jewelry. If a storm blows through the area and rips the roof off of an apartment building, then it would be the landlord’s insurance that would cover the damage to the building. But the property of the tenants inside each apartment is not covered by the landlord’s insurance policy. It is up to the tenants to get their own insurance.

A renters insurance policy can protect you in case someone breaks into your apartment and steals your new television and stereo and it can compensate you for furniture or other items lost in a fire.

There are a few factors that renters should keep in mind when it comes to renters insurance premium rates. If you live in a neighborhood that is prone to robberies, then your rates will be higher. If the previous tenant made several claims on his renters insurance policy for theft and damage, then that can affect your premiums as well.

Liability

There are several reasons why legal professionals recommend that tenants and landlords have a signed lease contract. One of the main ways that a lease protects the tenant and the landlord is that it outlines the property maintenance responsibilities that each party has. For example, if the tenant is responsible for taking care of ice build-ups on the sidewalk, then it is the tenant that can be sued if someone falls on unattended ice.

This is another reason why renters insurance is an excellent idea for tenants. There is a liability portion to renters insurance that will pay for any damages or lawsuits that occur in areas that the tenant is responsible for. In the case of the ice, the tenant with renters insurance would be completely covered for any damages, both medical and civil, that may come up as a result of the accident.

Temporary Accommodations

One of the examples we discussed earlier is of an apartment building roof being damaged in a storm. The landlord is covered by his insurance for the cost of the repairs, but those repairs will take time. Where are you supposed to go while there are contractors working around the apartment building and the storm debris is being cleaned out of the building?

One of the coverage options offered in renters insurance is reimbursement for temporary accommodations. The exact process varies from insurance company to insurance company, but the general premise is that the insurance company will either put you up in a hotel while the repairs are being made or reimburse you for the hotel costs that you accrue. Ask your insurance agent about the details for temporary accommodations as most insurance companies have limits on how much they will reimburse.

Getting the Protection You Need

Renters insurance is a way for tenants to protect their personal property and themselves in case an unfortunate incident occurs while renting a home or apartment. A renter should never assume that the landlord’s insurance policy will offer ample coverage because, in most cases, the landlord’s policy offers no coverage at all to tenants.

But how much does renter’s insurance cost? That is the question frequently asked when this topic comes up, but most people are shocked to learn how inexpensive it really is. Of course it varies on location, but the average renters insurance premium is typically between $10 and $25 a month. Now consider that cost with the value of the items in your apartment or rental home. You probably have electronics such as TVs, computers, cell phones, a DVD player, and so on. How many thousands of dollars do you have invested in that equipment? Then take a look at other items such as furniture, clothing, cookware, jewelery, and so on.

You probably have tens of thousands of dollars worth of possessions in your apartment and never really thought about it that way. Combine the value of those things with the liability protection offered by renters insurance and the few bucks a month for coverage is a no-brainer.

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You don’t want to make any hasty moves because one move too soon could mean losses in the thousands over the long term.  Not all insurance companies are on your side or in business to protect you.  In fact, I’ve found that many are simply out there to swindle your money.

I’ve compiled a list of ten tips to take into consideration when purchasing a new insurance policy.  Hopefully these tips will help you make a wise decision and save yourself countless headaches.

1- Research consumer complaints

This is probably the most important tip on this list.  Knowing what the complaints are against a company will tell you how solid of an insurance company they are.  Companies with the fewest complaints are typically the companies that make an effort to provide excellent customer service.

2- Check agent’s credentials

This is another tip that will make an agent extremely uncomfortable or very confident.  Always ask for an agent’s credentials, no matter how small the insurance policy.  I have heard horror stories of insurance agents selling completely false insurance plans and then a big accident happens.  Well guess what?  No insurance coverage for that person.  Don’t find yourself in this situation; it’s truly something you can avoid by simply asking for credentials or looking into their background online.

3- Shop around before you make the big move

You shop around for things like cars and clothes, so why not insurance packages?  Research prices from various insurance companies and compare quotes.  I recommend comparing at least five quotes before you make your final decision.  A long term contract with an insurance company is something that you want to be 100% confident in. Spending 30 minutes shopping around could literally save hundreds or even thousands of dollars.

4- Research the company’s ratings 

Insurance companies are always competing for higher rankings.  By researching ratings and review online, you can find out which companies place an effort on providing higher value and which ones couldn’t care less.  Do your due diligence; you might even be surprised at the companies that don’t fare too well.

5- Get the right coverage but don’t get too much

Never let an agent tell you how much insurance or coverage you need.  This is something that is your responsibility to figure out.  Letting an insurance company tell you what you need is like asking a casino how much you should gamble.  Whether you need an umbrella policy or extended coverage, this is for you to decide, not an agent.  Come to the meeting with an agent prepared, not at a loss for words. Remember, insurance agents work on commission, so the more they sell you, the more money they make.

6- Ask some tough questions

Insurance is a significant financial decision.  Take the time to really ask the tough and important questions.  Make it your goal to make your agent squirm in his chair.  If he answers all of your tough questions and you’re satisfied, you’ve most likely found a great insurance company to give your money to. If the agent can’t or won’t answer your questions directly you may want to look elsewhere.

7- Take a “free look”

This is a wonderful opportunity to really “get to know” your insurance policy.  Whip out that bad boy and study your policy.  If you are not completely happy, return your policy within a few days and get your premium back.  If the insurance company tries to tell you they don’t allow it, don’t back down. All policies are required to have a free look period, but the length of time varies. Ask what it is up front so you know how much time you have.

Well, hopefully this has helped.  Now, when you are on your quest for insurance, you won’t be lost.  Take these principles and print them out.  Keep them nearby when you are speaking with an insurance agent.  If you ever feel awkward or hesitant, that is a sign that it may be time to end the conversation and consider a different company.  Take your time and make a decision you and your wallet can be proud of!

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The Worrisome Role of Retirement Planning

Baby-boomers and previous generations, up to the 2008 global financial crisis, have been able to reassure their worries caused by projected strains on Medicare and Social Security by taking steps towards wise retirement investments. 401(k)s were the most popular option and still are. These and other defined contribution plans allow employees some investment freedoms with retirement funds they deposit themselves and maybe a matching employer addition depending on the particular agreement. This enabled individuals to potentially accumulate retirement savings which could offset some entitlement program letdowns.

Then 401(k)s and other retirement investment plans lost an average of 1/3 of their total value in the wake of the financial crisis. It was a big slap in the face for those who sought to turn their retirement funds into huge investments that erase virtually all post-retirement worries. What was once a smart way to independently insure yourself against an entitlement crisis has turned into a method of retirement planning that has garnered a fair amount of skepticism. Less Americans are putting their money in 401(k)s than ever before. Even worse, in hard times people are tapping into their retirement plans via 401k loans.

The Reassuring Role of Medigap Plans

Medicare parts A and B are entitled to all Americans over the age of 65 and are prerequisites for attaining any further alphabetized Medicare supplement. These additional plans are called Medigap plans, and are designed to meet the individual requirements of seniors who wish to pay for extra services and insurances not guaranteed by Medicare. Originally C through L, these additional offerings have since been tweaked, removing plans E, H, I, and J and adding M and N to the mix. These added benefits vary from the incredibly popular D, which helps subsidize prescription drug costs, to K, which is geared toward helping pay for hospice care.

Medigap plans are offered through private insurers. When combined with the varying state laws, authoritative bodies regulating senior living, and Medicare assistance, it can get confusing for the typical senior. Despite being embraced by 18 percent of Medicare recipients, Medigap plans are far from perfect and even farther from being perfectly understood. That’s why these plans must be understood today by the healthy minds of those who will possibly be deciding which one or ones to choose from tomorrow.

When it comes time to start slashing Medicare and Social Security spending, the first things to get considered will be the entitlements that apply to everyone. That’s why Medigap assistance might be a real life saver for those up-to-bat when the time comes. That could be never, or it could happen tomorrow. Regardless, you don’t want to be frail in your thinking when the time comes to pick the right plan. What people don’t realize is that Medicare doesn’t cover as many medical costs as they would expect. Medigap policies should be a retirement cost that’s planned on right from the beginning.

Those still a decade or more away from their retirement ought to stay up-to-date on the ongoing adjustments to Medicare. They should be ready to go with the right Medigap program when the day arrives for them to do so. They must know how to safeguard themselves against diminishing sources to fund their hard-earned entitlements, because in today’s world of crashed markets, unemployed hordes, and uncertain futures there are limited chances for those retiring to count on anybody but themselves.

Sure, our generation may still be many years away from needing Medicare or to even think about Medigap plans, but we also have aging parents who are faced with these decisions today. You can help them make the right decision by staying abreast of the ongoing changes. Then when the time comes for your own Medicare decisions you will be familiar with the process and can help ensure you’re doing the right thing for your own retirement.

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The good news is that patients can actually negotiate their medical bills, but many never do. The amount that you are originally billed is not always the amount that you absolutely must pay. While negotiating won’t work in every case, the majority of patients can negotiate their bill. Here are six tips to help you negotiate your next medical bill.

1. Be proactive.

If you know that funds are tight at the moment, let your doctor or healthcare provider know before any testing or procedure has been performed. Ask the physician to quote the price of a procedure, then ask if there is anything he or she can do to lower the cost. If you’ve recently been laid off or you don’t have health insurance, make sure that your doctor is aware of your situation. Believe it or not, there is a lot of flexibility in pricing.

If your doctor won’t lower the price of a procedure, ask if you could receive a discount for paying in cash. This is where having a health savings account can come in handy. If the doctor won’t offer a cash discount mention you may switch to another doctor that does. If you don’t have health insurance, always make sure to shop around for the lowest prices before undergoing any procedure if you can.

2. If you’ve already received the bill, figure out the fair market price of the procedures you received.

The fair market price is the price that insurance companies are asked to pay for different medical procedures. This is usually the same as the Medicare rate, as Medicare prices are the standard that many insurance companies and healthcare providers go by.

To find these prices, reference the Healthcare Blue Book, which lists the fair market price of most procedures. Once you know how much an insurance company would be expected to pay, you’ll have an idea of how much room you have to negotiate.

3. Contact the billing department and ask to speak with someone who can help you with your bill.

Contact the billing department and politely ask if there is anything that can be done to reduce your bill. Make sure to speak with a person who actually does the billing and not a receptionist, since he or she will be unable to make any changes to your bill. Explain that you simply cannot afford the bill, due to your low income, a period of unemployment, or another financially difficult situation. Be as calm and polite as possible throughout the entire conversation, as this will get you the best results. Again, it’s one of those situations where you won’t know unless you try and the worst that can happen is they aren’t able to do anything regarding your bill.

4. Carefully go through your bill and ask which, if any, charges can be billed differently.

Sometimes medical bills can be reduced by billing procedures a bit differently. Medical billing and coding is a tedious, detail oriented job. Each procedure has a very specific code which dictates its price. Your bill may be able to be reduced if the billing professional is willing to change the billing codes to less expensive, but comparable procedures.

I had a situation like this a few years ago with some eye exams. I had to go see a specialist for some testing on one of my eyes and when the bill came it looked like I owed over a thousand dollars because insurance didn’t cover these specific tests. So I went back to the doctor and inquired about how these couldn’t be covered and they went back to the insurance company and billed the tests as medically necessary, which meant the health insurance kicked in and covered them. Had I not asked I may have just thoughtlessly paid the bill even though I didn’t need to.

5. Request a new bill that lists the changes in price.

If your bill has been reduced, ask that the updated bill is sent to you. It’s important to keep a copy of this bill just in case you are again asked to pay the original price. If you don’t have a copy of the new bill, you will have no proof that your bill was reduced. And if you’ve ever worked with insurance companies before, you know very well how information gets lost or comes up “missing.”

6. If all else fails, ask for a payment plan.

Sometimes there really is nothing that can be done to reduce the price of your bill. While this is unfortunate, it can and does happen on occasion. If, after negotiating to the best of your abilities you are still required to pay the full price, ask for a payment plan.

Let the billing professional know what you can realistically afford to pay and when you can make payments. Do not agree to terms that are above your means, even if you are pushed to do so. As long as you make the required payments, you will be able to keep your bill out of collections and on its way to getting fully paid.

Again, this is a strategy I’ve employed on a few occasions. Namely, the bills associated with the birth of our children. Even after insurance picked up most of the tab we were left with a few thousand dollars in co-insurance and deductibles. Rather than writing a big check I called the billing department and let them know I couldn’t pay in full. To my surprise they immediately granted me a interest free payment program. That’s right, no interest charged for making payments over time! Talk about leveraging your money.

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Anyone who is fortunate enough to have a full-time job that provides health benefits probably gives little thought to their health insurance other than grumbling about the premiums. But those who are self-employed, work part-time, or otherwise don’t have health insurance provided as a benefit are living in an entirely different world.

I don’t need to tell you that the health care industry is a complete mess in this country, and given the skew toward employer-sponsored plans and plans varying from state to state it can be a nightmare for those looking to purchase their own health insurance. But for many people their only option is to head out on their own to try finding the best plan for themselves or their family.

Start With a Health Savings Account

While this isn’t exactly insurance, it can be a cost-effective way to mitigate your health care expenses. A Health Savings Account, or HSA is a personal account you create that allows you to set aside money for health care costs. What makes these accounts attractive are the tax benefits. With an HSA you are allowed to deposit money into an account, deduct the contributions, and allow it to grow tax-deferred and withdraw the money tax-free if done so for a qualified medical expense. Some expenses that qualify are: dental, vision, preventative care, baby wellness, and even insurance premiums, deductibles, and co-payments.

This is where the HSA can shine even if you plan on buying a health policy at a later date because you can use the money saved to apply toward those premiums. So, you’ll get a tax break on the contributions and a tax break on any gains within the account which can then be used to purchase the insurance. So, at the very least your first step in finding health insurance should be to establish an HSA.

For younger and relatively healthy individuals this may be the only coverage needed, but please keep in mind that it depends on what you can personal save. It won’t help you if you suddenly find yourself seriously ill and in the hospital or have an accident. But if you’re someone who doesn’t have any existing health issues and need little more than regular checkups, the HSA is a great starting point that will cover most of your bases and could mean you can save money on piggybacking a high-deductible health plan as a backup in the event of a major health issue.

Look for Group or Association Plans

Your next plan of attack should be to begin looking for group plans you may be eligible for. Group plans are usually the least expensive since the plan covers a large number of participants which spreads out the risk for the insurer. Even though you may not be employed by a company that offers a group plan, there could be opportunities out there.

You’ll need to think about what groups or associations you can identify with. Anything from your college alumni association to your local chamber of commerce. As strange as it may seem, even discount shopping clubs like Sam’s and Costco may provide insurance options. The group plans are out there, but you’ll have to do a little digging to see what’s available to you and your state. If you’re self-employed, don’t forget to check with the National Association for the Self-Employed for additional resources.

Finding Health Insurance Quotes

After you’ve exhausted your resources or have found some possible insurance plans it’s time to start looking for online insurance quotes. Health insurance premiums vary widely and even though you may have found a suitable group plan you won’t know how good the price is until you can compare it to other options. Another online quote resource is at eHealthInsurance where you can compare dozens of quotes for your situation.

Health Insurance Tax Breaks for the Self-Employed

If you’re self-employed you can ease the pain of high insurance premiums a bit thanks to some tax breaks. If you have self-employment income that’s claimed on Schedule C or F, are a member of an LLC, or own more than 2 percent of an S-Corporation, then you can take a deduction for health insurance expenses incurred for yourself, your spouse, and your dependents. Given the often high premiums for individual insurance policies this can be a nice tax deduction for your business.

It does get tricky if you have a working spouse who is eligible to participate in a group plan. As long as you are eligible to be covered under this plan, whether you opt to or not, these tax deductions for the self-employed go away for any months you were eligible for that plan.

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