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September 29, 2006
Smoking Bans Good for the Heart—and the Wallet
To smoke or not to smoke, that is the question.
OK, so I just slaughtered a well-known quote by one of history's most famous authors. And while I admit it sounded
a bit corny, my version holds more than a grain of truth—especially in the face of new medical findings. Experts are now telling us that not only is smoke-free air good for our lungs, it's also easier on our hearts—and our budgets. 
As more and more cities around the country move toward smoke-free environments in the workplace and other public areas, the cleaner air some of us are now breathing carries an added benefit that really isn't so surprising: a reduced likelihood of heart attack. And healthier bodies mean less risk for our insurers, which saves us all money in insurance and health care costs.
According to the U.S. Society of Actuaries, the direct medical cost of coronary heart disease in the United States caused by secondhand smoke totals $10 billion annually. That statistic is staggering; and it applies to smokers and non-smokers alike, demonstrating the effects of the toxins we breathe in as we all share the same smoke-laden air.
Just the other day I ran across this Reuters news article which details the health benefits experienced by the people of Pueblo, Colorado, InsureMe's home state, following the institution of a smoking ban there back in 2003. Reportedly, in the 18 months after that city banned the use of tobacco products in public places, hospital admissions for heart attacks dropped 27 percent; those in the nearby city of Colorado Springs, which at the time did not enforce a no-smoking policy, remained significantly unchanged.
Now I was curious whether similar findings had surfaced in other U.S. cities with public no-smoking ordinances, so I decided to do a little research. It didn't take me long to find an answer.
As it turns out, Pueblo is just one of several cities where a lack of secondhand smoke resulted in a decreased heart attack rate. Helena, Montana and Bowling Green, Ohio saw similar results upon outlawing public smoking.
It seems we've stumbled upon an undeniable medical fact here: regardless where we weigh in on the public smoking issue, banning smoking in public places means we're prone to live more heart-healthy lives—and that's good news for us all.
Since insurance premiums are based on risk, reducing our risk of heart attack also carries the added benefit of lowering our insurance prices. Whether buying health, life, home or auto insurance, this can mean big savings and a little more cushion in our household budgets...and we can all use a little more of that!
[Bonus Links:]
Heart Attacks Decline After Smoking Ban
Public Smoking Ban Slashes Heart Attacks
Ohio Town Shows Sharp Drop in Heart Attacks Following Smoking Ban
September 28, 2006
Why Your Expensive Health Insurance is Worth Every Penny
As I write this post, an article about health insurance is the most popular story on the New York Times' Web site, edging out a story about Borat, the controversial fictional Kazakh.
The story's headline, "The Choice: A Longer Life or More Stuff," is indeed very catchy.
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A recent study released by the Kaiser Family Foundation prompted Leonhardt's article. The foundation's widely circulated findings say that in seven years the cost of employer-sponsored health care "has doubled, while incomes and company revenue, which pay for health insurance, haven't risen nearly as much."
It has become conventional wisdom that the way out the health care crisis is to cut costs. "Yet it's wrong," says Leonhardt. "Living in a society that spends a lot of money on medical care creates real problems, but it also has something in common with getting old. It's better than the alternative."
Leonhardt says health care costs continue to rise not because we have broken system, but because the quality and scope of medical science and technology continue to improve. "The best way to reduce health care spending is to reduce health care itself," he says.
Back in the 1950s, people paid their health insurance with ease. Before you grieve for those bygone days, consider this: they didn't expect much in return and died a lot sooner than the average person today--often from diseases that are now easily treated.
Because of advances in medical science and technology, the average life span of a baby born today is a decade longer than the average baby born in 1950. A decade longer.
"We think of health care as if it were gasoline," says Leonhardt.
"If you think about this as the return on the investments in medicine, the payoff has been fabulous: Would you prefer spending an extra $5,500 on health care every year -- or losing 10 years off your lifespan?"
So, yes, health care costs are doubling and wages are still lagging far behind. But is that necessarily evidence of a broken system? Or is it simply evidence that the quality of care has doubled? Leonhardt suggests it's the latter.
Advances in medical procedures and drug remedies have grown exponentially in the past half century. We quickly absorb new technologies, forgetting that expensive and effective things like chemotherapy and defibrillators and cholesterol drugs weren't always around.
"We think of health care as if it were gasoline," says Leonhardt, "a product whose price and quality have nothing to do with each other."
In other words, we might change the way we think about health care.
"Somehow, going to the mall to buy clothes has come to be seen as a vaguely patriotic way to keep the economy humming, and taking out a risky mortgage is considered to be an investment in one's future. But medical care? That's just a cost."
Of your other big purchases—car, house, boat, house boat—how many add years to your life?
September 27, 2006
Life Insurance: How Much Is Enough?
A victim of my pop-culture obsessed society, I immediately noticed this press release, which sites a survey that asked Americans to select the T.V dad they think needs the most life-insurance coverage.
Who do you think needs more life insurance? Jersey mob boss Tony Soprano or Los Angeles architect Mike Brady? Dipsomaniac Homer J. Simpson or sports aficionado Ray Barone? And how does Clair's lawyer salary affect the Huxtable's life insurance needs? It kind of takes the fun out of television; but it raises the question, how do people determine their own life insurance needs?
As the survey reveals, many insurance consumers erroneously believe the amount of life insurance a person needs is proportionate to the degree of risk they face in their profession or hobbies. Although there is a greater likelihood that Tony Soprano will meet his untimely demise (after all, we are coming up on the final season of the Sopranos) than Mike Brady; risk of death is not the primary factor to consider when buying life insurance.
Insurers have developed complicated algorithms to gauge their risk to insure you. But, life is more unstable and fleeting than a mathematical formula can calculate. So, when deciding how much life insurance to purchase for your family, you may want to take a few factors into account, such as immediate expenses, ongoing needs and future expenses.
Check out the life insurance needs calculator provided by the non-profit LIFE Foundation.
An Insurance Information Institute (III) press release reports that life insurance premiums continue on a downward trend and will drop another 4 percent in 2007. That's good news for all of you reassessing your life insurance needs after reading this post.
If you are contemplating a second policy for more coverage, think again. According to III, buying one large policy will save you more. Typically, $250,000, $500,000 and $1,000,000 policies qualify for rate reductions. And remember, a $500,000 death benefit only pays out $2500 per month for 17 years--not including a retirement program or other employer-paid benefits.
September 26, 2006
Annuities: Not So Scary After All
Annuities.
If the very mention of the "A" word makes you feel like slinking into the corner in aversion, you're not alone. Annuities have also gotten a bad rap for being involved and complicated, and as a result, they've seemingly become the black sheep of the health and life insurance family.
In fact, I do believe this is the first post on annuities here at the Insurance Blog. Just goes to show you that the "A" word has intimidated us insurance bloggers, too. :)
The good news is that annuities have become much easier to understand, and combined with new earning features, annuities are quickly growing in popularity. This month's Health Insurance Underwriter (HIU) magazine has a lengthy bit on the product, and combined with the helpful information over at the Insurance Information Institute, I think we can put the scary stigma of annuities to rest.
But let's start with the basics: What is an annuity?
According to the I.I.I., an annuity is a contact with an insurance company that allows the policyholder to make payments in exchange for retirement savings and/or a steady stream of income payments for life. We're talking about the possibility of a constant income that you cannot outlive.
Additionally, HIU reports that during your working years, a deferred annuity can be used to accumulate assets for retirement—the assets of which can grow tax-deferred. That means you don't have to pay federal income taxes on annuity earnings, which means that your money can potentially grow at a faster rate than it could in other subject-to-tax products. Bling, bling, as the kids say.
In addition to tax-deferred assets, HIU highlights three more reasons why annuities are becoming so popular.
Take a look:
- Income for Life. I touched on this briefly, but currently, annuities are the only product than that guarantee a stream of payments that can't be outlived by the policyholder. The best life insurance policy in the world can't even guarantee that.
- No Limits on Contribution. Non-qualified annuities are not subject to the same rules which limit annual contributions to IRAs and other qualified plans.
- Safety of a Premium. Annuities are relatively low-risk products which contain features that allow the annuity holder to make premium payments.
Despite those great benefits, annuities are only great if they're right for you. How can you tell? HIU says a deferred annuity may be the solution for folks who:
- are risk-averse
- are contributing the maximum to their employer-sponsored qualified plan (like a 401k)
- are a little (or a lot) behind in retirement savings
- could benefit from a tax-deferred product
- need retirement income
It's pretty cool stuff. Additionally, because annuities have undergone recent product enhancement, more insurance agents are selling annuities—making it easier to find a knowledgeable agent who can help you select the annuity that's best for you.
Let's recap: annuities have the capabilities to grow, tax-deferred while you're employed. They also have the capability to provide you and your loved ones with a steady stream of income past retirement that you can't outlive.
Clear as mud? :)
Don't hesitate to send me an email or leave your questions via our comments section. You can also visit the I.I.I. site for more on annuities, as well as this site which contains great product details and tips, along with a quiz to help you determine what kind of annuity is right for you.
September 25, 2006
The Insurance Industry, Image and Andre Agassi
Back in the 1990s, recently-retired tennis star Andre Agassi starred in a series of commercials for Canon cameras in which he said, "Image is everything." The tagline had two meanings--one referring to photo quality, the other to Agassi's iconoclastic and ill-advised fashion sense.
(If he doesn't cringe every time he sees himself in a mullet and denim shorts, I'd be really surprised.)
"The insurance industry's image is still in the mullet and jean shorts stage."
From anecdotal evidence, I'd say insurers are down there with journalists and lawyers in terms of popular support, battling it out with each other to prevent falling down the list into the area reserved for tobacco company executives and used-car salesmen.
It doesn't have to be that way.
It doesn't have to be that way because insurance companies provide an invaluable service: they solve the age-old problem of risk with a remarkably simple and effective solution: they pool and spread it. That's it.
Without insurance we'd never build houses, drive cars or wrestle anacondas--the risks would be too great. What if hail wrecks my roof? What if one of my dinner guests sues me for tripping on the stairs? We'd never start businesses, either.
The other day, flipping through a magazine, I noticed a full-page Allstate ad that brought up this very notion. Front and center was an image of a guy tip-toeing his way through a morass of banana peels. The headline read, "You probably don't spend much time think about insurance. But trying doing anything without it." Clever, right? Without insurance, the risk associated with even mundane daily stuff would be too great; we'd be constantly slipping on banana peels.
I, for one, tend forget this about insurance--and that's pretty incredible coming from someone who writes about it every day. I, like you, gripe about cutting a check every six months for auto and home insurance, not realizing that I am actually getting something for my money even if I never file a claim--peace of mind in the face of risk.
So here's a bit of free advice for the unpopular insurance industry: we all need to be reminded why we pay you once or twice a year. It may improve your image a bit.
September 22, 2006
Weekly Insurance Blog Wrap-Up
9/11 Insurance Losses Total $35.6 Billion
As we commemorate the 5th anniversary of the September 11 terrorist attacks, it's difficult to process the
destruction of human life on the level it occurred that day. It seems we all either know someone who was hurt or killed in the attacks, know someone who knows someone, or—worse yet—were touched by it personally ourselves.
Though the value of human life lost that day can never be truly quantified, these horrendous acts have also cost our country and its citizens billions of dollars in insurance claims. In fact, according to a paper published recently by the Insurance Information Institute (III), $35.6 billion have been paid out in property, life and liability claims as a result. Even more staggering, economic losses in New York City alone have exceeded $90 billion.
Five years after the fact, Insurance industry leaders and public policymakers continue to consider how the underwriting of political risks--particularly international terrorism--is best handled within the insurance and reinsurance sectors.
To find out how these losses have affected the insurance industry as a whole, I highly recommend the III article. You can find it here.
September 21, 2006
Can't Afford Life Insurance? Liar!
Below the belt question of the day: What's more important--that $4 frappuccino in your hand or your child's future?
David F. Woods, president of the non-profit Life and Health Insurance Foundation for Education (LIFE), poses this question to parents who are reluctant to buy life insurance because of cost concerns.
"When someone says they can't afford life insurance they are saying they love things more than they love their family," Woods wrote in a post on LIFE's blog, The Insurance Word. "What would your family rather have in the event of your death - 365 empty Starbucks coffee cups or $500,000?"
In addition to Starbucks coffee, he lists gluttonous SUVs and flat-screen TVs among the things material goods that leave us unable (read: unwilling) to afford life insurance. Woods acknowledges that he "may" sound like he's laying a guilt trip on his readers. [Not at all, Dave!]
"But it will only resonate as guilt if it's true," he says, twisting the blade a little. "I'm just giving you the 21st Century list of common excuses for not taking care of one's family at their death. It's not about affordability, it's about priorities."
I like Mr. Woods' blunt delivery. It is about priorities. Sure, we all need transportation, escapes from reality and a.m. infusions of caffeine and sugar. But do we really need a Hummer to get to the office park, a flat screen TV to watch "CSI," and caramel macchiato to wake up in the morning? Hardly! (Although that middle one is close.)
Woods is not suggesting you give up all material things and live in a hand-built cabin on a pond in the Massachusetts wilderness. The sacrifices he's suggesting are pretty small ("How about giving up one movie ticket a week?"). Woods says a policy with a $500,000 death benefit can cost as little as a dollar a day.
His point: life insurance is affordable if it's a priority.
Read the entire post here.
[Bonus]: Find out how much sugar and creamer is in a large--excuse me, venti--Starbucks Frappuccino here.
September 20, 2006
Do Safer Bikes Mean Lower Premiums?
Yesterday as I commuted during rush hour, I glanced to my left to see a couple motorcyclists careen between lanes at 30 plus mph. I noticed the reaction of the other drivers--eye-rolling, fist-shaking, inaudible ranting. Maybe we envied their mobility as the rest of us suckers inched along. But if you're like me, you have mixed feelings and have probably had both positive and negative experiences with motorcycle riders.
Negative: Those riders that pop wheelies and attempt various stunts, like foot sliding.
Positive: Jesse James.
Negative: Babies on bikes--more prevalent in third-world countries.
According to an article on the Insurance Journal Web site, motorcycles make up only two percent of the vehicles on the road, but are responsible for 9.4 percent of all highway deaths. Having ridden on a motorcycle, I get the appeal. However, with statistics like that, I also understand why some auto insurers don't even offer motorcycle insurance.
Recently, motorcycle manufactures have begun to install air-bags, in an effort to decrease motorcycle-related deaths and possibly reduce the cost of insurance.
Some companies are even coming up with accessories for safety-conscious riders. Worldwide Riders, headquartered in Cheyenne, Wyo., sells a vest with a bladder that inflates when a rider is thrown from his or her bike. And motorcycle-driving schools have popped up across the country.
But regardless of all the progress made in motorcycle safety, the U.S. Department of Transportation's National Highway Traffic Safety Administration (NHTSA) estimated there were 4,315 motorcycle-related fatalities in 2005.
I didn't write this with the (sole) intention of putting the fear of god into every car or motorcycle driver. But safe, conscientious driving doesn't have to take all the fun out of riding. And graduating from a class will only lower your motorcycle insurance premiums. In the meantime, don't give all "motorheads" a bad name by speeding down the highway shirt-and helmetless
The Insurance Information Institute offers some interesting statistics on motorcycle crashes as well as money-saving tips for buying adequate motorcycle insurance.
September 19, 2006
Jackass Insurance: It'll Cost You
If you're anything like me, you've gasped, laughed, shrieked, and cried over the Jackass crew. And with their second movie, Jackass: Number Two, hitting theaters this week, star Johnny Knoxville said the group had insurance on the brain this time around.
Knoxville et al. said they were certain they were going to die during the Jackass sequel, and therefore asked studio execs to shell out $7 million in insurance coverage to protect them. According to Starpulse.com, the precautions weren't unwarrented—Knoxville said he nearly died during the soon-to-be-infamous rocket-launching stunt.
"When the rocket exploded in one stunt—there was like a foot-long metal rod that went right out next to my side. It was close!" said the Jackass star.
Director Jeff Tremain agreed, adding that when they watched the playback of the rocket stunt, the frame by frame footage showed the rocket casings shooting out the back and side, barely missing Knoxville's torso. Tremain also explained how he went about asking the studio for the insurance money.
"The studio is like, well what do you need $7 million for? And I'm like well, you've got to insure these guys! You know. The tapes cost $7. The cameras are about $2,000. After that, it's all insurance!"
Makes you wonder if said studio execs had ever watched five minutes of Jackass in their lives...or if they just leapt at the chance to invest in something that the kids would go crazy for. Otherwise, insurance would have been foremost on their minds.
So, before you attempt to wrestle an anaconda in a Chuck E. Cheese ball pit...contact the movie's studio reps to find out who agreed to insure these jackasses pranksters.
[Source]: Exposay
[Hat tip]: The Insurance Coverage Blog
September 18, 2006
Young Adults Get Comfortable Parents' Insurance Nest
Sign of the Times: "Not only are children moving back home after college and asking Mom and Dad for monthly subsidies, but in a growing number of states children can now stay on their parents' health insurance plans well into their 20's."
In an article headlined "For Insurance, Adult Children Ride Piggy Back," the New York Times explores an outgrowth of the "twixter" or "boomerang kid" phenomenon: kids hanging on to their parents' health insurance. This one, however, is fueled not just by impoverished recent grads and obliging parents, but by state legislatures and insurance companies. "The trend stems from a concern that a healthy -- and profitable -- segment of the population is dropping out of the insurance pool," says the Times.
In the past couple of years many states have upped the cutoff age at which young adults must leave Mom and Dad's health insurance nest. New Jersey, the article notes, has a particularly lax cutoff, allowing "kids" to stay on their parents' plan until they reach 30. Insurance companies have embraced such legislation because many young adults simply go without insurance (read: don't pay premiums) when they run out of time on their parents' policies.
A feeling of invincibility isn't the reason many (30 percent of 18- to 24-year-olds) young adults forgo health insurance--nor is it necessarily a desire to sponge off Mom and Dad for a few more years. As Maribeth noted in an earlier post, lack of funds and/or lack of employer-sponsored health care is keeping young adults from getting their own coverage.
Of course, there are old-school scolds out there who think this is all hogwash--just another example of coddling to Kippers (Kids in Parents' Pockets Eroding Retirement Savings). "When I was your age ..."
[Hat tip]: to Time Magazine for the generation tags.
September 15, 2006
Weekly Insurance Blog Wrap-Up
September 14, 2006
Are Mimi's Legs Really Worth a Billion Dollars?
O.k., so Mariah Carey's very public leg-insurance policy is old news. But Carey's attention-grabbing stunt does bring up an interesting blog post topic: The Body-Part-Insurance Publicity Stunt. (We'll get to how this relates to your insurance needs later.)
According to Slate's Daniel Engber, among the more popular body-part insurance ploys are the purported million-dollar policies on Michael Flatly's legs, J-Lo's posterior, and somewhat recently, Mimi's legs.
The celebrity world and the insurance world usually run along two parallel paths (the point being that they don't intersect, not that they're similar). The Insurance Publicity Stunt is the rare occasion when the twain bend to meet each other.
It's an exciting thing for a person in the insurance business. Think about it: stars using insurance (insurance) to get the attention of the press! Who says insurance is boring?!
According to Engber, the practice of taking out an insurance policy on a specific body part began when vaudeville villain Ben Turpin took out a policy on his cross-eyed eyes. (Had they gone straight he would have collected.) Later, Bette Davis insured her waistline for $28,000. It has been downhill from there.
According to this story from the Guardian, a Hollywood agent once expressed an interest in buying a policy for the chest hair of one of his furrier clients.
You're probably asking: What does this post have to do with my insurance needs? (And when did this blog become a tabloid?)
Believe it or not, there is something relevant to you in this post. Here goes: The thing that lends the body-part-insurance publicity stunt a modicum of credibility is that these stars really do owe a chunk of their paychecks to certain anatomical assets. Although it smacks of self-promotion, the practice has a certain amount of logic behind it.
The famous wine taster's taste buds are inextricably linked to his livelihood, so he's smart to prepare for the day when a freak fondue accident leaves him with damaged taste buds, right?
Most of us, however, don't need to take out policies on specific body parts, but we do need to protect ourselves from loss of income resulting from an untimely accident (wait, are there timely accidents?). Many smart folks do this by buying disability insurance.
According to the Insurance Information Institute, this kind of insurance "pays an insured person an income when that person is unable to work because of an accident or illness." The Institute says premiums depend on your age, the nature of your work, and how much money you would need to replace your lost income. III, helpfully: "So, for instance, an accountant working in an office would have much lower disability premiums than a construction worker."
Learn more about disability insurance from the III.
September 13, 2006
Celebrate Life Insurance This September
As far as commemorative months go, Life Insurance Awareness Month isn't the most exciting. Miniseries about life insurance don't interrupt scheduled programming and roads aren't blocked for life insurance parades. Life insurance doesn't get much play, probably because it addresses the dreaded issue of one's mortality.
It's a topic no one wants to think about, which is likely one reason why according to a consumer survey, one-third of U.S. adults lack life insurance entirely.
But life insurance isn't about your death or your life. It is about your peace of mind, knowing your family will be financailly secure in your absence.
The main reason people purchase life insurance is to replace their lost income should they die. Obviously, if you have small children you'd want them to continue to live as comfortably as possible. However, life insurance isn't just for the kids. It can protect the financial future of your siblings, aging parents, a domestic partner and adult children as well. An adequate life insurance policy can help pay for your funeral, burial, remaining medical expenses or debts. Although I'm sure VISA mourns the loss of a customer, they will still expect someone to pay off the plasma T.V.
Maybe you're loaded and your heirs are sure to see some cash when you kick it, but if you're like most people there won't be much left over. A decent life insurance policy can create an inheritance for your family when you name them as beneficiaries. That can mean college funds for your children and no mortgage payments for your spouse.
Use your life insurance as an additional savings account while you're alive. Permanent life insurance offers a cash value--you can actually accrue money through the life of your policy. Part of your payment goes toward the cost of the insurance, and the remainder is put in a tax-sheltered savings account. And you can borrow from it if money gets tight.
If I haven't persuaded you to purchase life insurance, maybe Olympic Gold-Medalist Scott Hamilton can. In honor of Life Insurance Awareness Month, the Life and Health Insurance Foundation for Education has compiled several stories about how life insurance has helped families by easing their financially concerns in the wake of their loss.
Once you're convinced, check out the Insurance Information Institute for tips on determining the amount you need, choosing a company and saving money on your policy.
September 12, 2006
Insurance Agents Go Back to School
It seems that students aren't the only ones heading back to school this year. The Insurance Journal reported today that states are looking to beef up agent education in one very important area: flood insurance.
IJ reports that the National Association of Insurance Commissioners (NAIC) has adopted a "model bulletin" for insurance professionals who offer flood insurance through the nation's National Flood Insurance Program (NFIP). The effort relates to the 2004 Flood Insurance Reform Act, which requires flood insurance producers to bone up on the intricacies of flood coverage—the need for which dramatically spiked with the Gulf tragedies in 2005.
Now, the Federal Emergency Management Agency (FEMA) and state departments are developing continuing education classes for insurance professionals. New continuing-ed requirements include satisfying a certain number of NFIP-related courses; failure to comply with these requirements may result in an agent losing his or her ability to write flood insurance policies through the NFIP.
What's this mean for you?
Additional agent training and education always bodes well for consumers. Among other chief objectives, the Flood Insurance Reform Act is geared towards consumer satisfaction—helping Americans get the best service possible from their insurance professional.
At InsureMe, we've made it easy to learn about flood insurance, too. Visit our Insurance Resource Center or take a look at this recent Insurance Blog post to learn more about flood coverage.
September 11, 2006
50 Cent Busted for Driving Without Insurance!
Call me crazy, but I say that if you're a wealthy rap star and can afford a Lamborghini, you can afford to buy auto insurance. Fiddy also neglected to register his car and didn't have a license, according to MSN.
Ok, I'm guilty of pimping the 50 Cent story to lure you into reading this less shiny but far more important story about children and healthcare.
Here are the depressing numbers: There 10 million uninsured children in the U.S., according to the U.S. Department of Health and Human Services.
(Call me crazy, but I say that if you're the world's only superpower ... )
A new study from the September issue of Pediatrics finds that Hispanic children make up nearly a third of the total.
The study finds that children with parents who aren't U.S. citizens, have little income and experience difficulty making appointments are much more likely to go without medical care.
Insure Kids Now!, a Dept. of Health and Human Services program, offers some comfort to parents who are waiting to hear about their immigration status: according to their Web site, enrolling your child for health insurance through the State Children's Health Insurance Program or Medicaid will not, in most cases, adversely affect your chances at citizenship or residency.
The site doesn't, however, offer much comfort to parents who are here illegally. That's a shame. I don't care what side of the immigration debate you're on, I think it's unconscionable to have a system where parents are afraid to get care for their kids.
[Links]:
http://coveringkidsandfamilies.org/
http://www.insurekidsnow.gov/
September 08, 2006
Weekly Insurance Blog Wrap-Up
Kids Left Home? Time to Adjust Your Insurance!
One of the points we continually reiterate here at InsureMe is the importance of annual insurance reviews. As your life changes and family members come and go, your insurance needs change; so making sure this is reflected on your insurance policies is really important.
Now that most college-bound young adults are experiencing the world of roommates, late night study sessions and dorm parties, this is the perfect time to pull out those insurance policies and take a closer look. And if you're experiencing the so called "empty nest syndrome" this year, it's doubly important to make changes to your insurance. Depending on the situation, you may find you can remove your youngster from your auto policy completely or save money on your homeowner's insurance now that he's moved all his possessions into the dorm. Regardless, there are savings to be had!
"The biggest mistake people make after the kids leave the house is not making changes to insurance," says Kimberly Lankford, editor of Kiplinger's Personal Finance magazine. "It's one of the key times to look at insurance."
I recently ran across this great article for empty nesters at Bankrate.com. It gives great tips for saving on your insurance premiums if your kids have left home. If you find yourself in this situation—or you know someone who is—it's definitely worth a read (or sharing with a friend).
Now that school has started, autumn is definitely in the air...enjoy!
September 07, 2006
What Kind of Life Insurance Should You Buy?
Since it is life insurance awareness month, I figured I'd weigh in on the mother of all insurance debates: term life insurance v. cash value (also know as permanent) life insurance.
Disclaimer 1: Life insurance is complicated and doesn't make for fun, lively blog posts. So if you're getting ready to click away to more exciting fare (like Maribeth's great post on insurance fraud), I'm not offended.
Before you go, though, you can quickly scan the two bullets below to get an idea of my biased and simplistic take on the debate between term life and cash value life insurance:
- If you're going to hold on to your insurance forever--or at least longer than 15-20 years--then cash value/permanent might be a good pick.
- If you're NOT going to hold on to your life insurance for that long, term life insurance is probably a better option than cash value/permanent life insurance.
Disclaimer 2: Once again, life insurance is very complicated and requires some research. Everyone has different circumstances and needs, so instead of simply taking my opinion and running with it, check out some of these less biased, more thoroughly researched takes on the term life v. cash value debate. Find them here, here and here.
Now, if I've still got you, I plan to explain why I made those bold assertions above. But first, let me just make sure we're on the same page with our definitions of term and perm life insurance.
Term life: Term policies cover you for the duration of the term period - one year, thirty years, until you turn 65, etc. It pays a death benefit when you kick it.Permanent/cash value: Permanent polices are often referred to as "cash value" polices because they usually include a death benefit and some type of long-term, tax-advantaged savings plan.
So term life pays a death benefit. That's it. It's simple, and that's one of the attractive things about it. Cash value plans pay a death benefit, too, but they also have a savings component. So if, and this is the Big If, you hang on to your cash value life insurance policy long enough, the amount you earn with the savings account will balance or perhaps exceed the out the amount you pay in premiums.
The thing to keep in mind, though, is that cash value policies are more expensive. So once again, cash value/permanent policies are probably not a worthwhile short-term investment, because it will take some time before the savings part accrues enough cash to counter the more expensive premium.
Term life partisans say "buy term and invest the difference." The "difference" refers to the amount extra you would have to pay for a cash value/permanent life policy. That extra amount, they say, can put to use elsewhere, such as into a Roth IRA or 401k, where it will offer a better rate of return than in a cash value savings account.
Have I thoroughly confused you yet?
Disclaimer 3: Unfortunately, life insurance is still more complicated than I've shown here. We haven't even gotten into cost indices and the various types of permanent life insurance (variable, universal, whole life).
As it's only Sept.7, and Life Insurance Awareness Month is just getting going, I have plenty of time to confuse you even further. Stay tuned.
I'll end this entry with a link to a very helpful little site that's operated by the National Association of Insurance Commissioners. It is called InsureU and it offers insurance advice based on your life stage.
September 06, 2006
The Cost of Fraud
The job of sniffing out insurance fraud has gotten a lot more exciting lately as states have begun to treat the crime more seriously using undercover agents and wiretaps to collect evidentiary support.
In New York, the milieu of many a mafia flick and the state with the second highest auto insurance premiums in the nation, they are taking an "organized crime approach." Everyone likes a good mobster movie; and undercover agents faking illnesses to nab corrupt doctors, lawyers and "silent owners" or sneaking into offices after hours to tap phone lines smacks of Scorsese.
Not only that, it's proving effective. New York Deputy Attorney General Peter Pope told the Associated Press, "If I'm trying to prove the patient in fact didn't have the symptoms he was being treated for, the only way to do that is to find real patients or send undercovers into the clinic. The biggest investigations and those with the widest reach occurred when we were listening in with court approval.''
The Coalition Against Insurance Fraud reported that many individuals have a lax attitude when it comes to defrauding insurers--one in four Americans say it's okay for others to make fraudulent claims and one in ten say they would do so if they knew they wouldn't get caught. So it's not surprising that insurance fraud is prevalent across all insurance types. According to the National Insurance Crime Bureau (NICB), it costs the industry between $85 and $120 billion annually and each American household $200 to $300 per year.
But beyond the monetary cost, certain stunts endanger lives. A "swoop and squat" in Los Angeles is a "zoom and squat" in Philidelphia, but the MO is the same. One car, packed with passengers, swerves in front of another and hits the brakes to cause a rear-end collision. Then the passengers claim injuries in an attempt to profit from the staged accident.
Unfortunately, this type of scam goes much deeper than this one car full of people. It usually involves a crime ring with professional lawyers and doctors at the top and indigent immigrants hanging on for dear life--and sometimes losing their lives--at the bottom.
Mafia-esque crime rings, wiretaps and secret agents make insurance fraud sound pretty fascinating. However, the majority of fraud--soft fraud--comes in less dramatic forms. According to the Insurance Information Institute (III), common frauds include "padding," or inflating actual claims; misrepresenting facts on an insurance application; and submitting claims for injuries or damage that never occurred.
But regardless of the degree of the crime, it's Americans who pay, and pay, and pay...each time they renew their policy.
September 05, 2006
State Insurance Departments Do It Better, So Says Ore. Regulator
State insurance departments are better consumer protectors than the federal government, according to Oregon State Insurance Administrator, Joel Ario. Ario, who was recently interviewed by the Insurance Journal, said while the federal government does play a role in protecting consumers, individual state departments are "better equipped" to handle insurance issues, simply because they're closer to those affected by the problem. 
States also play in important role when it comes to developing new insurance laws and regulations. National programs are often built "on successful state experiments," Ario said, "It's in the nature of the 50 states to experiment in different kinds of ways. We're the laboratories of democracy."
The state of Oregon is certainly setting that precedent in regard to credit-based insurance scoring—rather than outlawing credit scoring altogether, the state imposed laws that allows credit scores to be used when writing new business, but not on existing clients. The system has worked so far, and if the measure passes on the General Election Ballot this November, it could set the stage for credit-based changes in other states.
And while the credit issue is certainly proof that state initiatives are major players in the national picture, Ario also contends that consumer protection is best done at the state level. "Insurance is one of those messy sort of products," he says. "A federal consumer protection call center is not nearly as good as state by state protections."
I have to agree; state departments of insurance (DOI) really take care of business. Because insurance law is regulated on a state-by-state basis, the DOI has more knowledge about insurance regulation, consumer rights and consumer protection laws as it pertains to that state, then just about any federally-based department.
Of course, not many people know that their state has a department of insurance—before working here at InsureMe, I had no idea. But state DOIs have a myriad of tips and resources available to residents, and are also the go-to department for any issues that might arise with an insurance company or agent.
Get better acquainted with your state DOI by visiting this state map, courtesy of the National Association of Insurance Commissioners.
[Source:] Insurance Journal
September 01, 2006
September = Life Insurance Awareness Month
Nearly 68 million Americans have no life insurance coverage—and those who do are often grossly undersured. But the Life and Health Insurance Foundation for Education (LIFE) is out to change all that.
This non-profit group, founded in 1994, conducts an annual industry-wide education campaign each September to encourage Americans to evaluate their life insurance needs and obtain needed coverage.
A recent press release on Hispanic PRWire cites what LIFE believes to be the most common misperceptions about life insurance, including expense and sufficient employer coverage. It also gives some great recommendations on how to find a good agent in your area. [Find them here: September's Life Insurance Awareness Month Calls Attention to the Need for Financial Protection]
For more information on life insurance and this annual event, visit www.life-line.org.
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