When Does Life Insurance Make Sense?

posted by SooYeon(Pia), Shin

This financial protection can be particularly comforting when it comes to providing:

- protection for your family against financial hardship or to maintain their current standard of living.
- cash to pay off mortgages, taxes, or other debts so your heirs are not left with them.
- funds to pay funeral expenses.
- a continuing income stream for your surviving family members.
- an inheritance for your heirs.
- a nest egg for future expenses like your children’s or grandchildren’s education.

As you can see, life insurance is most applicable when you have dependents or heirs that you want to provide for. On the other hand, there are plenty of situations when life insurance does not make sense. For instance…

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Are You Covered for Natural Disaster?

By Connie Yee

Homeowners may not aware that some natural disasters are not covered by their home insurance policy. For those who live in any floods, earthquakes, landslides, wars or nuclear prone areas, purchasing extra insurance policies may be beneficial. However, homeowners tend to ignore purchasing extra policies because of the high premium and limited coverage. To understand which policies are important and how to purchase them, please read below.

Earthquakes: Typically, the policy is 10-15% deductible but have high premiums that can cost more than $2000 (annually). Homeowners in high-risk locations can purchase the insurance from private companies and state-run insurance pool such as the CEA (California Earthquake Authority).

Floods: The policy cost between $500 to $1000 annually depending on the location of the home. However, the insurance would be useful only if it was purchase 30 days before the natural disaster occurs. Homeowners can purchase the flood insurance from the National Flood Insurance Program or private companies.

Hurricanes: Typically, the policy is 2-15% deductible. Policy tends to vary by state. In state such as Alabama, Florida, Louisiana, Mississippi, etc. the government provides windstorm coverage for those who cannot afford private coverage.

References:

Do you really need disaster insurance?
Should You Have Disaster Insurance?

When You Need Disaster Insurance

Will Your Insurer Pay Up?

Posted By: Michael W. Collins

There have been enough headlines, lawsuits and regulatory concern in recent years to give us pause. Here's just a sample:

• Nearly two years after Hurricane Katrina inflicted a record-setting $66 billion in insured losses -- more than the toll of Hurricane Andrew, the Sept. 11 attacks and the Northridge, Calif., earthquake combined -- thousands of policyholders who thought they had full coverage are still bickering with their insurers over whether wind or water destroyed their homes.
• Blue Cross and Kaiser Foundation Health Plan were both recently assessed regulatory fines for "wrongful recession" -- illegally withdrawing individual insurance coverage from people after they got sick. Critics say the companies scoured the consumers' applications for minor errors or omissions to use as an excuse for ending their coverage.

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Understanding Insurance

Posted by: Madeleine Brooks

14 Useless Insurance Policies

Posted By: Michael Collins

When Shakespeare observed, "What fools these mortals be," he easily could have been referring to our tendency to buy unnecessary or downright useless insurance.

Granted, some insurance coverage is absolutely necessary, including home, health, auto, life and long-term disability. Ignore these at your peril.

But on more than a dozen policies -- especially narrowly focused single-purpose coverage on things like accidental death, cancer, credit card fraud and mortgages -- we simply fall victim to fear and salesmanship and purchase coverage that is redundant, unnecessary, impractical or downright wasteful.

"All of the single-purpose insurances turn out to be a bad deal," says Gail Hillebrand, senior attorney for Consumers Union.

"You have to ask what the loss ratio is, which is for every dollar taken in, how much is paid back out in claims? It's quite common in various kinds of credit insurance for it to be 10 (cents to) 15 cents on the dollar and even less, as opposed to your car insurance, which turns out to be paying 80 (cents to) 85 cents on the dollar. It just illustrates how bad a deal it can be."

What's worse, 19% to 25% of us overpay for insurance by purchasing coverage with zero or low deductibles, according to a recent study, "Why Do People Buy Too Much Insurance?" by New York University professors Zur Shapira and Itzhak Venezia.

"It was kind of surprising," says Shapira. "Almost always, you should get a high deductible rather than a low deductible."

Jack Hungelmann, a veteran Minneapolis insurance agent, risk management consultant and author of "Insurance for Dummies," says our tendency to buy too much and/or frivolous coverage is the norm rather than the exception.

"You want a balanced program so that all the major losses are equally well-covered, with prudent use of deductibles," he says. "Most insurance programs I audit are out of balance."

Ready to trim your insurance costs? Here, in alphabetical order, are 14 policies you can probably scale back -- or live without.

1. Accidental death insurance
Accidental death covers you in some, although by no means all, of the ways you could die accidentally -- that is, perishing due to something other than disease or old age.

However, chances are your existing life insurance policy will cover you in most of those events anyway.

Accidental death falls under what Hungelmann calls "Las Vegas coverage," because the odds of it happening are slim.

"Don't waste your money on that," he says. "If you need life insurance, buy enough so that it covers all circumstances. Don't buy just for certain scenarios."

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Insurance and Financial Planning

By: Thomas Gillick
When creating a financial plan people usually focus on expenses versus how much income they are spending. A crucial piece within the budget which some people overlook is insurance and insurance policies. Insurance can protect against accidents, ailments and aid in dealing with the death of a loved one. Auto, homeowner’s, health, liability and life insurance are just a couple examples of insurances that might be necessary. Homeowner’s insurance protects your house from some damages and liability issues such as someone getting injured on your property. Homeowner insurance ranges from HO-1 to HO-8 all having different amount of coverage. Auto insurance protects you from car accident damages and incidental damages done to your car. Car insurance is mandatory in order to have a vehicle on the road. Auto insurance policies are very different and depend on the characteristics of the policyholder. Liability insurance is usually held by higher income families in order to have lawsuit and liability coverage. Life insurance helps protect loved ones after someone dies in the family. Life insurance can provide dependents to maintain their standard of living and protect against expensive medical bills. Health insurance is also very important usually provided by employers in a benefits package. Insurance is a key component in any financial plan as it is as costly as it is important.
Sources:
http://finance.yahoo.com/how-to-guide/insurance/13308#c4
http://finance.yahoo.com/how-to-guide/insurance/12823
http://moneycentral.msn.com/insure/home.asp?pkw=PI&vendor=Paid+Inclusion&OCID=iSEMPI

Forecast for 2009: Insurance industry leaders predict what’s ahead

By Jennifer C. Rankin

What a difference three months makes. During the first nine months of 2008, consumers, corporate execs, and media pundits felt uneasy about a wide variety of economic indicators, but hopeful. That all changed in September, when the credit crunch ballooned into Wall Street’s biggest crisis since the Great Depression, setting into motion an astonishing chain of financial failures and exposing the vulnerable underbelly of the world’s financial infrastructure.

On December 1, America’s bi-partisan National Bureau of Economic Research confirmed the U.S. is in a full-blown recession (and has been for a year). Stock indexes continue to yo-yo wildly. And venerable financial institutions are reaching out for federal financial aid, reinventing themselves as commercial banks, laying off tens of thousands of employees, putting themselves up for sale, and more.

It’s against this backdrop that Resource asked insurance industry leaders to share their thoughts on what the year ahead holds for sales, profitability, technology and customer service. The executives who participated in our annual forecast included a cross-section of members of the LL Global board of directors plus several industry analysts.

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Posted by Kaitlin Lanier

This SCHIP will sail, State Children's Health Insurance Program pushed by Obama

Posted by Jen Lynch

Obama hailed the 289 to 139 vote and nudged the Senate to act with the "same sense of urgency so that it can be one of the first measures I sign into law when I am president."

The president-elect vowed as a candidate to provide health coverage to every child, and the expansion of the State Children's Health Insurance Program, known as SCHIP, is a major down payment toward meeting that goal. "In this moment of crisis, ensuring that every child in America has access to affordable health care is not just good economic policy, but a moral obligation we hold as parents and citizens," Obama said.

The House legislation would cost nearly $33 billion over 4 1/2 years and would be funded in part by a cigarette tax increase of 61 cents to $1 per pack. Bush vetoed two similar bills in 2007, objecting to the tax increase and the expansion of government health care. The Senate Finance Committee will take up a similar measure today, with floor action expected to begin next week.

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