Good food, good cheer and, of course, gifts are some focal points of the holiday season. The hustle and bustle, however, may distract us from potential risks that can surround us this time of year. Thefts and break-ins may increase during the holidays, since thieves often know that many families travel during the holiday season potentially leaving their homes unattended or stocked with high-priced gifts. Consider these five ways to help protect your valuables, home and car this holiday season:
1. Leave the Lights On
Many people look forward to visiting family or taking a trip while the kids are out of school over the holidays — and thieves might be looking forward to your trip, too. Unoccupied houses can be potential targets for burglary, but hiding the signs of vacancy may fool thieves into thinking you’re still home. Leaving lights on, asking a neighbor to get your mail and setting automatic timers on holiday lights and decorations may give the appearance of being home. It may also be a good idea to do a home security check and consider making any necessary updates before you leave.
2. Keep Valuables Out of Sight
Shopping often goes hand in hand with the holiday season. As you go from store to store, it can be tempting to leave bags and packages in the back seat of your car — and in plain sight of thieves. Be sure to hide your purchases or put them in the trunk, park in well-lit areas and lock your doors.
3. Be Vigilant About Locking Up
The first, and perhaps most important, step in keeping your home safe is to be vigilant about locking up. When leaving your home, keep in mind that thieves don’t always enter through the front door. Make sure all the doors, including back and patio doors, are locked. And finally, check your windows periodically to make sure the hardware is secure.
4. Customize Package Deliveries
If you prefer to do your holiday shopping online, it might be a good idea to start customizing the delivery times and locations for your packages to help deter theft. Most shipping carriers may allow you to have a package dropped off at your home by a back or side door instead of the front door. You can also choose to have your packages held at a carrier’s location so you can pick them up at a time convenient to your schedule.
5. Protect Your Luggage
If you do plan to be traveling during the holiday season, you may want to take a few steps to help prevent theft of your luggage. According to Consumer Reports, it may be a good idea to avoid using designer bags and opt for more basic-looking luggage so as not to draw attention to thieves. When going through security, make sure to be vigilant of watching your bag and grabbing it right away. Do not let your bag sit at the end of a conveyor belt when putting your shoes back on. You may also want to consider having the zippers of your bag face toward the inside of the overhead bin so it would be tricky for a thief to steal something if you’ve stepped away from your seat.
Taking a few more precautions during this time of year may help you to enjoy the holiday season with some extra peace of mind and happy cheer. Have questions? Give the insurance professionals at USA Mututal Insurance a call to get started with homeowners insurance.
People who buy life insurance enjoy one or more of the following benefits:
Benefit: Peace of mind
The number one reason to buy life insurance is that if you died, someone you care about would be in a rough spot financially. This insurance policy protects your loved ones from financial hardship caused by losing you.
If you’re married, you might worry about how your spouse will pay off the house or put food on the table without your income. If you’re a parent, you might worry about your kids paying for college without you, or how their guardian will pay for childcare. Or maybe you want to spare your loved ones from digging into their own pockets to pay for your funeral.
Plenty of people lose sleep over money, but the right life insurance policy can help you feel confident your loved ones will have the lump sum they need if you pass away unexpectedly. But having a policy can also help you live more fully today.
Let’s say you want to invest money in yourself or improve your lifestyle right now, but draining your savings to put a down payment on a house or go back to school makes you nervous. What if you take on all that debt and then die unexpectedly? Would anyone you love get stuck with the bill? If you have life insurance, you know your debts will be paid even if the worst happens. Insured people can feel more confident in taking these financial risks to improve your life now.
Benefit: Expanding your financial portfolio
Not all life insurance policies increase your net worth, but those that come with a cash value component (known as permanent life insurance policies) can. Cash value (known as a living benefit because you can take advantage of it before death) acts like a savings or investment account, accumulating funds as you pay your premiums and collecting interest along the way.
Many use their life insurance policies as a way to diversify their retirement savings or “force” themselves to put aside cash for a rainy day. While cash value shouldn’t replace an emergency fund, you can take out a loan against it if you need it to pay medical bills, long-term care, or any other expense. You’ll just need to pay all policy loans back, or any death benefits your loved ones receive will be reduced by the amount you owe.
Benefit: Tax relief
Two main tax benefits may come with life insurance: a tax-free death benefit and tax-deferred cash value growth.
Tax-free death benefit payout
If your net worth is already high, you might buy life insurance solely to avoid estate taxes when leaving an inheritance to your spouse or children. Death benefit payouts are tax-free in most cases, so if you set your policy up smartly, you could prevent Uncle Sam from taking a massive cut of your estate.
For most, the tax benefit of life insurance are more of a perk. Generally, your beneficiaries won’t have to pay taxes on the money your policy pays them.
Tax-deferred cash value growth
If you buy a cash value policy, any interest your account earns grows without you having to claim it on your taxes. Those who want to access their cash value can borrow it from this account tax-free in most cases as well.
Benefit: Flexible financial security
No one knows what life will send your way, and life insurance is like a Swiss Army knife of financial protection. Your beneficiaries can wield the death benefit payout to cover whatever expenses they wish, even if you buy final expense life insurance specifically. Loved ones can use the money to pay down the mortgage, send the kids to college, or keep food on the table.
Some life insurance policies offer flexibility for you too. For instance, universal life insurance allows you to adjust your premiums and death benefit payout as needed. And if you buy a term life policy with a conversion option, you could extend your life insurance to provide lifetime coverage.
There are even optional riders that allow you to take out part of your death benefit while you're still alive if you've come down with a terminal illness—and when it comes to expensive chemo treatments, that flexible option can make all the difference.
Benefit: Affordable coverage
Most consumers overestimate the cost of life insurance, believing that premium payments cost three times what they’d actually pay. In particular, millennials overestimate by more than five times the actual price.
The truth is, life insurance can be quite affordable, depending on your situation and the insurance policy you choose. A term life insurance policy is cheaper than a permanent policy like whole life, for example, and young, healthy people see lower rates than older adults with preexisting conditions.
If you’re looking for life insurance for seniors or you have preexisting conditions, you may still have inexpensive options. Insurers tend to specialize in insuring people in specific situations to make a name for themselves among those shoppers. Some companies are quite forgiving of former tobacco use, for example. Others may offer low rates for people with diabetes.
If you get a life insurance quote you that you think is too high, shop around. Chances are, you’ll find a lower rate for similar coverage elsewhere.
Do you want to know more? Click here to speak with one our insurance professionals at USA Mutual Insurance.
Professional liability insurance is a must-have for many businesses, especially if you provide a service.Every small business faces risks. But if you earn your living offering a service, dissatisfied clients can also cost you. Any business that sells its expertise should consider professional liability insurance.
Also known as errors and omissions (E&O) insurance, this coverage protects your company and your bottom line from customer claims of late, incomplete, or unsatisfactory work.Accusations like these can lead to costly lawsuits. As a small business owner, you must understand the unique risks you face and the insurance coverage you need to protect you.
Let’s take a look at the difference between professional liability and other liability policies and which ones might make the most sense for your business.
What is professional liability insurance?
Successful business owners typically have happy clients. But what if an upset client decides to sue? That’s when you’ll need professional liability insurance.Professional liability insurance protects small businesses by covering the costs of client lawsuits claiming substandard work.A client may claim your negligence caused them financial harm. And a client that thinks you cost them money may take legal action in hopes of recovering their losses. Professional liability insurance can cover the costs of lawsuits over:
And even if you didn’t miss a deadline, E&O coverage can still protect you. After all, you don’t need to be at fault to be sued. Successfully defending yourself in court can be expensive. Professional liability insurance will cover those costs and help ensure your business stays afloat.
If you already have a general liability insurance policy, you might wonder how it differs from professional liability insurance. In short, a general liability policy protects you from third-party claims like:
Is professional liability insurance required?
Many small business owners may wonder, when is professional liability insurance required? You’re not alone. The short answer: It depends on your business.
Some states require legal or medical malpractice insurance for lawyers, doctors, and certain medical professionals. Professional liability coverage isn’t required by law for other service-based jobs. That doesn’t mean it’s not important.
Which businesses should consider carrying professional liability coverage?
Any business that provides professional services should look into professional liability coverage. Some businesses that may need this coverage include:
Your clients may require a policy to be in place before they’ll agree to do business with you. They want to know that they’re protected if your company fails to deliver on promises or breaks the terms of your contract.
If a client requires professional liability coverage, you’ll need to provide a certificate of insurance that serves as proof of coverage and outlines your policy limits. If you have employees, you may also need a fidelity bond to cover criminal acts by workers, such as fraud.
Want to know more? Contact the insurance professionals at USA Mutual Insurance to help guide you in purchasing the best policy for your needs.
Special event insurance is an insurance policy that helps protect your investment in a specific event, such as a wedding. Event insurance may help cover your costs if you unexpectedly need to cancel your event or if you're found responsible for property damage or an injury caused during your event.
WHAT DOES SPECIAL EVENT INSURANCE COVER?
You may be able to purchase two types of coverage to help protect your upcoming event — cancellation coverage and liability coverage.
WHAT EVENTS DOES SPECIAL EVENT INSURANCE COVER?
Eligible events are typically private and may include functions such as:
WHAT TYPES OF EVENTS ARE NOT COVERED BY SPECIAL EVENT INSURANCE?
Public events, including dance recitals, sporting events and exhibitions, typically cannot be insured under this coverage, and neither can bachelor/bachelorette parties. Certain business functions, such as fundraisers or private corporate parties, may or may not be eligible. Your agent can tell you what specific events may qualify for coverage.
WHEN SHOULD I BUY EVENT INSURANCE?
Keep in mind that it's a good idea to purchase special event insurance as soon as you start making deposits or purchases for your event. There may also be restrictions on when you can purchase coverage — often no later than two weeks before your event but no sooner than two years prior.
Want to know more? Contact the team at USA Mutual Insurance to get more details on our Special Events Insurance Policies.
Business Owner’s Policy (BOP) combines business property and business liability insurance into one business insurance policy. BOP insurance helps cover your business from claims resulting from things like fire, theft or other covered disasters. Business owners insurance also helps cover claims that could arise from your business’s operation. These include claims of bodily injury or property damage. They also include claims related to personal and advertising injury.
Businesses can tailor their Business Owner’s Policy (BOP) to help meet their unique needs by adding optional coverages like:
A BOP Policy is great because it can be custom-made to fit industry specific businesses. This means it’s great for businesses of any size especially small businesses. Package policies, such as a Business Owner’s Policy, are built to cover businesses that generally face the same risks. Customizing your BOP Insurance is an imperative first step when insuring your business. You should do this from the beginning to protect against loss and damages early on.
Who Needs a Business Owner’s Policy? You should consider a business owner’s insurance policy if:
What’s the Advantage of a Business Owner’s Policy?Purchasing a BOP Policy is smart and convenient. It simplifies coverage needs by including business property insurance and business liability insurance. These are two important coverages combined into one. A Business Owner’s Policy (BOP) offers businesses a way to save money while getting broad coverage for things like:
A BOP policy is a more affordable option than buying separate business property and liability policies. This policy is an even smarter and more convenient choice for business owners because you can add other coverages to it. Businesses with specific needs can tailor their BOP by adding coverages like:
Want to know more? Get in touch with one of our insurance professionals to see how we can help you get started with a Business Owner's Policy.
Allowing employees to work from home has notable perks for small business owners. These include promoting a satisfied workforce and cutting down on office space expenses. However, among all of the telecommuting fanfare, there are still potential liabilities to consider. This is especially true when you have home-based business employees.
Questions you should begin asking yourself include:
Steps to Protect Your Work-from-Home Employees & Business
All homeowners insurance policies provide basic financial protection against losses arising from a fire, windstorm or theft. However, individual insurance companies differentiate themselves by offering an array of coverage options to suit the varied needs of their customers. So it is important to review the different options and decide what is right for you.
Every year take the time to ask yourself this basic question: How much homeowners insurance do I need?
The answer is that you need enough insurance to cover the following:
You need enough insurance to cover the cost of rebuilding your home at current construction costs. Do not include the cost of the land. And do not base your rebuilding costs on the price you paid for your home. The cost of rebuilding could be more or less than the price you paid or could sell it for today.
Some banks require you to buy homeowners insurance to cover the amount of your mortgage. If the limit of your insurance policy is based on your mortgage, make sure it is enough to cover the cost of rebuilding. (If your mortgage is paid off, do not cancel your homeowners policy—it is the best way to protects your investment in your home.)
For a quick estimate of the amount of insurance you need, multiply the total square footage of your home by local building costs per square foot. To find out construction costs in your community, call your local real estate agent, builders association or insurance agent.
Factors that will determine the cost of rebuilding your home:
Flood insurance is available from the National Flood Insurance Program (NFIP) and from some private insurers. Earthquake coverage is available from private insurance companies or, in California, also through the California Earthquake Authority.
Replacement cost policies
Most policies cover replacement cost for damage to the structure. A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality.If you purchase a flood insurance policy, coverage for the structure is available on a replacement cost basis.
Extended replacement cost coverage
After a major hurricane or a tornado, building materials and construction workers are often in great demand. This can push rebuilding costs above homeowners policy limits, leaving you without enough money to cover the bill. To protect against such a situation, you can buy a policy that pays more than the policy limits.
An extended replacement cost policy will pay an extra 20 percent or more above the limits, depending on the insurance company.
Your personal possessions
Most homeowners insurance policies provide coverage for your personal possessions for approximately 50 percent to 70 percent of the amount of insurance you have on the structure or “dwelling” of your home. The limits of the policy typically appear on the Declarations Page under Section I, Coverages, A. Dwelling.
To determine if this is enough coverage, you need to conduct a home inventory. This is a detailed list of everything you own and information related to the cost to replace these items if they were stolen or destroyed by a disaster such as a fire. Be sure to review your inventory with your agent and if you need more coverage, consider higher limits for your personal possessions.
Replacement Cost or Actual Cash Value
You can either insure your belongings for their actual cash value, which pays to replace your home or possessions minus a deduction for depreciation up to the limit of your policy. Or you can opt for replacement cost, which pays the actual cost of replacing your home or possessions (no deduction for depreciation) up to the limit of your policy.
Suppose, for example, a fire destroys a 10-year-old TV set in your living room. If you have a replacement cost policy for the contents of your home, the insurance company will pay to replace the TV set with a new one. If you have an actual cash value policy, it will pay only a percentage of the cost of a new TV set because the TV has been used for 10 years and is worth a lot less than its original cost. Some replacement cost policies actually replace the item and deliver it to you.
Generally, the price of replacement cost coverage is about 10 percent more than that of actual cash value. If you need a flood insurance policy for your belongings, it is only available on an actual cash value basis.
Insuring expensive items with floaters/endorsements
There may be limits on how much coverage you get for expensive items such as jewelry, silverware and furs. Generally, there is a limit on jewelry for $1,000 to $2,000. You should ask your agent or look it up in your policy. This information is in Section I, Personal Property, Special Limits of Liability. Insurance companies may also place a limit on what they will pay for computers.
If the limits are too low, consider buying a special personal property floater or an endorsement. These allow you to insure these items individually or as a collection. You are charged a premium based on what the item (or collection) is, its dollar value and where you live.
You can determine the value by providing your agent with a recent receipt or getting the item or collection appraised.
Additional living expenses after a disaster
Additional living expenses (ALE) is a very important feature of a standard homeowners insurance policy. It pays the additional costs of temporarily living away from your home if you cannot stay in it due to a fire, severe storm or other insured disaster. ALE covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt.
Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 20 percent of the insurance on your house. Some companies will even sell you a policy that provides you with an unlimited amount of loss of use coverage, for a limited amount of time.
If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.
You should talk to your agent or company to make sure you know exactly how much ALE coverage you have and how long the coverage will be in effect. In most cases, you can increase this coverage for an additional premium.
Liability to others
This part of your policy covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by pets. It pays for both the cost of defending you in court and for any damages a court rules you must pay.
Generally, most homeowners insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available. Increasingly, it is recommended that homeowners consider purchasing at least $300,000 to $500,000 worth of coverage of liability protection.
Umbrella or Excess Liability
Make sure you have enough liability insurance to protect your assets. If you own property and or have investments and savings that are worth more than the liability limits in your policy, you may consider purchasing an excess liability or umbrella policy.
Umbrella or excess liability policies provide extra coverage. They start to pay after you have used up the liability insurance in your underlying homeowners (or auto) policy. An umbrella policy is not part of your homeowners policy. You have to purchase it separately. In addition to providing a higher dollar amount, these policies offer broader coverage. You are covered for libel, slander, and invasion of privacy, which are not covered under standard homeowners or auto policies.
The cost of an umbrella policy depends on how much underlying insurance you have and the kind of risk you represent. The greater the underlying liability coverage, the cheaper the policy. This is because you would be the less likely to need the additional insurance. Most companies will require a minimum of $300,000 in existing liability insurance on your home and your car, if you own one.
Want to know more about homeowners insurance or you are ready to buy a policy. Give the team at USA Mutual Insurance a call at 718-285-6500 or contact us via out Contact Us page.
You probably make a checklist for performing home repairs, a shopping list before hitting the grocery store, or perhaps a to-do list for work assignments—but do you have a checklist for reviewing your insurance coverage? With the start of hurricane season (June 1 – November 30), it's a good time to check your homeowners or renters insurance—and this handy list from the Insurance Information Institute will make it easy to be sure you’re well-prepared in case a storm comes your way.
Check your policy limit; is it enough to rebuild your home?
Make sure to have enough coverage to completely rebuild your home in the event it is severely damaged or destroyed. And, remember, the real estate value of a house is not the same as the cost to rebuild.
Do you know everything you own and how much it’s worth?
Imagine having to re-purchase all of your furniture, clothing and other personal possessions. Now think about what that would cost. Most insurers provide coverage for personal possessions—approximately 50 to 70 percent of the amount of insurance you have on the structure of your home. Is this enough? The best way to determine what you actually need is to conduct a home inventory—a detailed list of your belongings and their estimated value.
Check what type of insurance you have for your belongings:
Replacement Cost Coverage – pays what it would cost to replace your personal possessions at their current value.
Actual Cash Value Coverage – pays to replace your personal possessions only at their depreciated value.
Does your policy provide enough Additional Living Expenses coverage?
Additional Living Expenses (ALE) coverage kicks in if your home is rendered uninhabitable as the result of a hurricane or other insured disaster. ALE covers the extra costs involved in living away from home—hotel bills, restaurant meals and other expenses, over and above your customary living expenses—incurred while your home is being repaired or rebuilt. If you rent out part of your home, this coverage also reimburses you for lost rental income.
Check that the coverage is adequate for your needs:
ALE coverage is generally equal to 20 percent of the amount of insurance coverage that you have on the structure of your house; however, most insurers offer the option of higher coverage limits.
Many policies provide ALE reimbursements only for a specific amount of time; make sure you’re comfortable with the time limits in your policy.
What is the percentage of the hurricane/windstorm deductible stated in your policy?
Insurers in every coastal state from Maine to Texas include separate deductibles for hurricanes and/or windstorms in their homeowners policies. Unlike the standard “dollar deductible” on an auto or home policy, a hurricane or windstorm deductible is usually expressed as a percentage. It is clearly stated on the Declarations (front) page of your homeowners policy.
Hurricane and windstorm deductibles generally range from 1 to 5 percent of the insured value of the structure of your home. A hurricane deductible is applied only to hurricanes whereas a windstorm deductible applies to any type of wind. If your policy has a hurricane deductible, it will clearly state the specific “trigger” that would cause the deductible to go into effect.
Keep in mind:
If you live in an area at high risk for hurricanes, your hurricane deductible may be a higher percentage.
Depending on your insurer and the state where you live, you may have the option of paying more money in premiums in exchange for a lower deductible.
A deductible is basically the amount subtracted from an insurance payout. If you have a high hurricane or windstorm deductible consider putting aside the additional money you may need to rebuild your home.
What disasters does your insurance policy cover?
Standard homeowners insurance policies provide coverage for hurricanes, wind, theft, fire, explosion, lightning strikes and a host of other disasters. However, all policies also list exclusions—such as for flood or earthquake—which are NOT covered by the policy. Get to know the exclusions in your policy and either talk to your Insurance Professional about purchasing separate coverage, or be prepared to pay the cost of those damages out-of-pocket.
Important additional coverages to consider in hurricane-prone areas:
Sewer Back-Up Coverage – Can be purchased either as a separate policy or as an endorsement to an existing homeowners policy. Sewer backups and damage from runoff water caused by major downpours are not covered under standard homeowners nor by flood insurance.
Flood Insurance – Separate flood insurance is available from FEMA’s National Flood Insurance Program (NFIP) and from some private insurance companies.
But, wait, what about your flood insurance policy?
People tend to underestimate the risk of flooding, but 90 percent of all natural disasters include some form of flooding—especially hurricanes! If you live in a flood zone, or a hurricane-prone area, a separate flood insurance policy is a must. But it’s equally important to understand what it actually covers.
An NFIP flood insurance policy provides coverage for up to $250,000 in replacement cost coverage on the structure of the home and $100,000 in actual cash value coverage for personal possessions. Coverage for basements is limited, so make sure you understand what is considered a basement, as well as what is and is not covered in that area of the house. The NFIP policy also does not include coverage for ALE.
Additional tips about flood insurance:
There is a 30-day waiting period for a flood insurance policy to go into effect so don’t wait until a storm is imminent to apply for coverage.
The NFIP offers a range of deductibles; the deductible you choose will affect the cost of the policy and the amount of money you would receive if you file a claim.
If you require a higher amount of coverage than is offered by the NFIP, consider getting excess flood insurance which is available from private insurance companies.
How Does Home Insurance Work?Homeowners insurance is made up of coverage levels that may help pay to repair your home and replace your belongings if they are damaged by hazards, such as theft or fire. It could also help cover costs if you accidentally damage another person’s property, or if someone is injured at your home.
It’s important to understand what your policy actually covers. Standard policies include some causes of loss (such as wind damage, fires or theft) but not others (such as earthquakes and flooding). Save yourself the hassle and avoid filing a claim for an uncovered event.
When to Use Homeowners InsuranceYou Have Significant Damage or Total LossThis is primarily what homeowners insurance is most useful for — when your home suffers a loss so great after an unexpected incident that it becomes unlivable. In a situation like this, you should definitely file a claim to recover your losses.
The Cost of Repair Exceeds Your DeductibleIf part of your roof blows off and the estimate for repair is $5,000, when your deductible is $1,000, file a claim. If you incur an expensive repair or replacement to fix your home, and it was caused by a covered loss, you should use homeowners insurance to help pay for it.
You Haven’t Submitted a Claim in Three or More YearsInsurers take your claims history into account when they decide if they will cover you and what to charge for your premium. Statistically — whether for home or car insurance – if you’ve previously filed a claim, you’re more likely to file additional claims in the future, which makes you riskier to insure. When you do need to file claims, make sure to space them out as much as possible.
What Homeowners Insurance CoversCoverage for the Structure of Your Home
What Homeowners Insurance Doesn’t CoverYour home insurance policy will not cover every possible disaster or mishap that can happen. If your neighborhood is hit by certain types of natural disasters and your home suffers structural damage, the loss will likely not be covered by your insurance carrier.
How to Get the Most Out of a Home Insurance ClaimReport Any Crime to the Police and Take Photos of DamageIf the damage was a result of theft or vandalism, report it to the local police immediately. Take photos of the damage, and make sure to get a copy of the police report for your insurer.
Contact Your Insurance Company and File a ClaimBefore formally filing a home insurance claim, ask your insurance agent the following questions:
Prepare a List of Damaged or Lost ItemsYou will need to substantiate your loss, so make a list of destroyed or damaged items and their estimated costs. Make a copy of the list for your adjuster when they come for an in-person visit.
Have an Adjuster Inspect the DamageYour insurance company will arrange for an adjuster to come and inspect your home in person. They will review the property damage to determine how much the insurance company should pay for the loss.
Make Temporary Repairs and Keep ReceiptsWithin reason, take the steps needed to make your home livable again. Save receipts to submit to your insurance company for reimbursement. If your property is unlivable, most policies provide coverage for additional living expenses, but you’ll need to provide proof of the costs.
Ask QuestionsDon’t be afraid to ask your USA Mutual Insurance agent or your state department of insurance any questions you may have along the way. Once the terms of your settlement are agreed upon, state laws require that your payment is promptly sent.
If you’re an adult with a house, a spouse, kids, or any financial liabilities, and you should consider buying a life insurance policy. With life insurance in place, you won’t have to lose sleep worrying about the financial burden your loved ones would inherit if you were to die unexpectedly. Here are 6 things to look for when buying a life insurance policy:
A 20-year term life insurance policy for $750,000 would set you back $717.50 annually, while a whole life policy with the same amount of coverage would have cost $9,875 per year.
This is obviously a huge disparity, and one consumers should know about when weighing the pros and cons of buying whole life or term life. While whole life insurance provides a death benefit your whole life (until you die), it’s a stretch to say the benefit of perpetual life insurance is always worth the added expense.
however, scoring an affordable life insurance policy is not only important now – it is important for the future, too. That’s because, when life happens and times get tough, life insurance is often one of the first items people stop paying for.
If you buy a policy that’s affordable, you’ll be much more likely to be able to hold onto it if you have to make any serious cuts to your budget.
#2: Immediate Payout
If you see a commercial on TV offering you quick and easy coverage with no medical exam, it’s probably from a company that offers what’s called “simplified issue” life insurance. Because there are few questions on the application and no exam, it’s true that you can easily qualify for these type of policies.
However, there’s often a two- or three-year waiting period after purchase before they’ll pay out 100% of the proceeds upon death. If you want life insurance coverage that starts right away, this is obviously imperfect.
You also want to make sure your policy pays 100% of the “face value” from day one if possible. Stay away from simplified issues policies unless it’s a last resort.
#3: Underwriting Leniency
You could be making a huge financial mistake if you buy a policy from a company that does not treat your particular health or personal activities fairly. Companies range widely on how they price out risks like diabetes, smoking, travel outside the U.S., or your family’s medical history.
Be sure to speak to a knowledgeable independent agent who can ‘shop’ various companies to find the best rates for your particular situation. If you don’t, you risk overpaying for a life insurance policy – or not being accepted altogether.
#4: Automatic Payments
While there are certain bills you may want to pay manually, life insurance is one of those recurring expenses that is usually best set up as an automatic bank draft or credit card charge – especially in the case of term life insurance where your premium stays the same.
The reason for this is simple: If you forget about your life insurance bill and don’t make your payment on time (or within your grace period, which is usually 30 days), your policy may be cancelled altogether. At that point, your issuer may not allow you to pay back your missed premiums, and they’re not required to reinstate your policy, either.
Look for a life insurance company that will let you pay your monthly premium automatically, and you’ll never have to worry about letting your policy lapse or missing a bill.
#5: Conversion Feature
If you’re looking into term life insurance, beware of policies that don’t allow you to “convert” your term policy into a permanent one. This feature typically allows you to exchange your term policy for a permanent plan (such as universal life or whole life) without proving you’re still healthy.
If you buy a 20-year term life insurance policy, for example, and decide after 19 years that you still need coverage but have developed some medical conditions since your initial term purchase, the conversion feature would allow you to keep your coverage, whereas you may not be able to qualify if you were to go back out to the market for a new policy. Most term policies include a conversion feature, but not all, so be sure to find out.
#6: Living Benefits
Thanks to a new wave of life insurance companies striving to meet consumer needs, there are more ways than ever to use life insurance while you’re living.For example, many newer policies give you the option to receive payments if you get a chronic illness or need to be placed in a care facility, Several companies also give you 20- or 25-year windows at which you can get back some or all of your premium paid into the policy if you no longer want or need the coverage.If you want the option to get cash out of your life insurance policy if you get cancer or need end-of-life care, then looking for a company that offers this option is a smart move.
Are you now ready or still unsure about Life Insurance? No worries. Click here to speak with one of our insurance professionals who will take the time to help you better understand these 6 key points.