Coffee to Car Payments

Pet Insurance Protects All the Ones You Love

A couple years back, our wiener dog, Winston, suffered a ruptured disc in his back and ultimately lost the use of his back legs. Over the following months, he spent several days in the hospital and also had to undergo two very painful surgeries. It was a very trying time for my girlfriend and I watching him drag his hind legs around and look at us wondering what was wrong. Sheri sat in the grass and cried. I waited till she went to bed and then sat on the porch and cried too. He is doing very well today and you can barely tell there was ever a problem. He is not allowed to go up and down stairs anymore and gets scolded a little for bypassing his doggy stairs and jumping on the furniture.

We ended up spending close to $5,000 in veterinary bills but fortunately were in a position to do so. One of the many thoughts in my head was  "How would it feel to have to make a different decision because 5 grand was simply out of the question?" and another was "How many people would have had to choose differently?" I began looking at pet insurance programs back then. Many of the plans I looked at had either a confusing reimbursement schedule with a specific dollar amount for a laundry list of procedures or they had a network of veterinarians that limited your ability to choose who was best suited to treat your pet. Some plans had both.

I finally found one that has no network and reimburses you 80% of the bill minus your deductible. Surveys have shown that the average pet owner will spend $1,200 before they have to make that difficult decision while the average pet owner with pet insurance is able to spend between $3,000 and $3,500 since they will be reimbursed. That's an extra $1,800 to $2,300 to keep your best friend around a little longer.

It's obviously out of the question to put a child with a serious illness down for financial reasons.

www.petsbest.com/MMPC128

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Please Share My Umbrella (Insurance).

What did the homeowners' insurance policy say to the auto insurance policy?  The punchline of this rather corny joke is both the title and topic of this post.  I came across this great article the other day about how personal umbrella policies plug holes in your coverage.  It does a great job of explaining what an umbrella policy is and how it works.  I want to go into a little more detail here on just a few of the points of the article.  The author starts by addressing three common misconceptions about umbrella insurance. 

"They are only for rich people."
Let's say that you were at fault in an accident that resulted in a judgment against you for $500,000.  Your auto insurance would typically provide coverage for the liability up to a $300,000 limit or whatever limit you had selected. You would then be responsible for the difference of $200,000.  Now, if you don't have $200,000 to cover that obligation, then you would just have this huge debt looming over you and you would pay as you are able (most likely for the rest of your life).  On the other hand, if you had $200,000, you would pay it off right away out of your own pocket.  So the reason people believe that umbrella policies are only for people who are well off is because those people are more inclined to spend the money to insure that such an event would not wipe out a lifetime of successful planning.  They will spend hundreds of dollars to protect thousands.   But even if you don't have a huge pile of cash, who wants to run the risk of "...a whole lot a tryin' just to get up that hill."  before you can finally put it behind you and start "Movin' on up"?

"It's too expensive."
Having just said that "people will spend hundreds of dollars to protect thousands", a basic personal umbrella policy is more affordable than you may think.  I've recently quoted several umbrella policies for my clients and the premiums for $1 million in coverage has ranged from $100-$200 per year or around $8-$15 per month. 

Adding additional coverages like uninsured and under-insured motorist coverage may be advisable and can add to the premium a little.  But, adding this coverage extends your protection beyond just damages that are caused by your personal negligence.  This post by David Lowe, a personal injury attorney, entitled "How Big is Your Umbrella?" sheds some additional light on this topic.

"It's too complicated to coordinate it with your existing coverage."
It really isn't that complicated to coordinate with your existing home and auto insurance even if you purchase it separately from a different carrier.  In some cases, the other carrier may ask you to adjust your liability limits on your current coverage in order to provide you with the most cost efficient means of acquiring the additional coverage.  They will tell you what the limits need to be and, once you've adjusted the limits, they will issue the policy.  Not that complicated really.  More on that here.

In conclusion, whether you rent an efficiency or own a mansion, drive an old used car or have a chauffeur, if there's any chance that you could cause someone injury or damages that would allow them to sue you, a personal umbrella policy is a very cost effective and simple way to protect and preserve what you've worked so hard for, whatever that may be.

Contact me for a quote.

 

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All Shook Up: Check Your Homeowners Insurance

One of my favorite things to do on the weekends is to sit and watch the History Channel.  A few weeks ago, I was watching a program about the 8+ magnitude New Madrid earthquake that rocked the Midwest in 1811.  Tremors were felt right here in Des Moines, IA (520 miles away).    This massive quake changed the landscape of the Midwest, permanently changing the course of the Mississippi River, and temporarily causing it to flow backward.

This morning, 197 years later, a smaller 5.2 magnitude earthquake again rocked the ground.  Fortunately, so far, there are no reports of damage or injuries.  However, my girlfriend's sister, who lives in Martinsville, Indiana (just south of Indianapolis) said she thought her house was going to fall down.  Here in Des Moines, WHO radio morning co-host, Bonnie Lucas, was sitting in her office and felt her chair move, grabbed her desk, and heard the ceiling panels start to shake.  At first, she thought it was Van Harden working on another invention (like cheese-crust pizza).  Then she read the newswire and realized it was just an earthquake.

This morning's quake likely didn't change the course of the Mississippi but, maybe you should check the fine print of your homeowners insurance to see if it covers earthquake damage.  This is NOT included in most homeowners insurance policies.  It is an available, affordable endorsement that can be added to most policies.  But, especially here in the Midwest, with the last major earthquake happening nearly 200 years ago, it probably wasn't even something you asked about when you took out your coverage.  The risk is nominal but so is the premium.  On the other hand, in the even of an actual loss, it could be financially devastating.

Want a free checkup?

Is your home underinsured?

Does your homeowners insurance provide actual cash value or replacement cost coverage if you suffer damage or a total loss to your home and it's contents?  The truth is nearly 60 percent of all homeowners are seriously underinsured.  There are several things to consider but the biggest one is which type of coverage your policy offers. 

Replacement cost coverage calculates the cost to repair or replace your home with one of comparable size using the same quality of materials as your current home and at today's cost.  Many companies are even allowing you to purchase guaranteed replacement cost coverage which allows you to get as much as 25% more than the estimated cost to rebuild.  This type of coverage is the best at ensuring that you will be back at the position you were prior to the damage to your home.  All with minimal out-of-pocket expense to you.

Now, lets look at actual cash value (ACV) insurance.  This type of coverage uses the same calculation of replacement cost but then subtracts depreciation.  Now different parts of your home depreciate at different rates and it is a complex calculation.  So, I won't pretend to be an expert at that.  But let's say that your 40-year-old home that you re-roofed 12 years ago with 25 year shingles and updated with a new furnace and water heater 8 years ago along with various other improvements you have been able to make burns to the ground.  What is the actual cash value of your home?

I don't know either but, one thing is certain.  It is less than what it will actually cost you to rebuild which leaves you with a couple of options:

• Build a nice, cozy home that is a lot smaller than the one you lost using the money you do get from your insurance company
• Build one similar in size and amenities to the one you lost and pay thousands of dollars out of your savings, retirement funds, or loans from friends or family.

One thing that should not be an option at that point is keeping the same agent.

A recent survey conducted by the National Association of Insurance Commissioners (NAIC) found that 64% of the homeowners who responded said that they were insured for replacement cost, 24% said ACV, and worst of all, 12% had no idea.  Veteran and new agents alike make this mistake and it could cost you thousands.  Go home tonight and review your declarations page of your homeowners insurance policy to see which coverage you have.  You'll probably sleep better....maybe...

Just call me "Monty"

Gosh, I love it when a plan finally starts to come together.  I've been working with the Springfield Nuclear Power Plant for months now to try to get a voluntary benefits plan in place for their employees.  I spent a lot of time to get Smithers to even introduce me to his boss, Mr. Burns.  See, he knew Mr. Burns wouldn't spend a plug nickel more than he had to on his employees.  Employers always tend to think of insurance as expensive and benefits as a hassle. 

Finally, one day, I had an idea.  I called Mr. Burns office when I knew Smithers was at lunch.  My thought was that a stingy old coot like Mr. Burns probably brown-bagged it every day.  Well, I got lucky.  He was kind of rude at first but, he couldn't cut me off with his mouth full.  Anyway, I told him that he could offer these benefits to his employees at little or no cost to himself, the business owner, since the employees pay for it themselves.  I went on to tell him that by offering these benefits on a pre-tax basis he would actually save money on the employer portion of his FICA taxes.  He was still a little skeptical and asked what it would cost to get this set up.  I told him that I could actually set up a Section 125 plan through the insurance company at no cost.  Well, he really couldn't say no at that point. 

I just had one thing I had to do.  I'd need to Simpsonize my professional portrait to fit in a little better in the little misfit town of Springfield.  "Thank you so much, Mr. Burns!" I said.  He said, "No.  Thank you...and just call me 'Monty'".

Compare this photo to the one in my sidebar.  How'd I do?

Why Wait for Socialized Medicine?

I just switched my own health insurance yesterday!  Let me tell you why.

I make it a point from time to time to re-evaluate my plan since I'm self-employed and responsible for paying all of it myself.  My old plan (by choice) had a $10,000 deductible and $20,000 maximum out-of-pocket cost in a calendar year; however, I did not have to meet my deductible to have small co-pays on prescription drugs and office visits.  So, being relatively healthy, the plan was well suited to me and it only cost me $94/month.

I'm 34 years old and since it hasn't been 12 months since my last cigarette, I'm still classified as a smoker for insurance purposes.  So, I looked at this new plan that had a $3,000 deductible and $5,000 maximum out-of-pocket.  I still got 3 office visits per year for a $30 co-pay without having to meet the deductible as well as $8 co-pays for prescription drugs.  So, I cut my deductible by $7,000 and my maximum out-of-pocket costs by $15,000.

Guess what?  My premium went from $94/month down to $70.75/per month.  So, I'd say it pays to re-evaluate your plan every couple years because the health care business is very competitive and good companies will always innovate to try to earn your business.

Besides my health insurance, I also had a $50,000 term life insurance policy costing me $21/month.  Well, I'm saving $23 on the health insurance and had the option of purchasing a $100,000 term life policy for $33.74 on the same application.  Sounded pretty good so I did that too.  Then I thought, "What the heck?  I'll take the dental plan too for $21.40/month."

So, I added it up and my total premium for everything went from $115/month to $125.85/month. So, what did I get for that extra $10.85?  I got $50,000 more life insurance, $15,000 less in out-of-pocket risk for major medical, $7,000 less for a deducible, and a dental plan to boot.  Plus, I like things simple.  I get this all for one single monthly payment.

I've often told people that the problem with health insurance is agents trying to sell you a "Cadillac" plan when a "Chevy" will give you peace of mind and get you where you want to go for a lot less money.  Affordable health care is very doable right now even through private companies if you first determine your tolerance for risk and then sit down with an agent who will help match it with the right plan.

I call it right-sizing your health insurance.

If you live in Iowa and are responsible for your own health insurance costs, get in touch with me.  It pains me to see people running around who have looked into health insurance, got a quote for way too much insurance, and think it's way too expensive to even consider.  They have some tolerance for risk or they sure wouldn't be uninsured.  But they're probably been quoted a premium 2-3 times what I'd end up quoting.

This post is getting a little long but one final thought:

I don't represent any of those no-name companies that send their fliers to your fax machine in the middle of the night.  I only write business through reputable insurers whose names you'll easily recognize.

Do you sell car insurance?

Sorry it's been over a week since I last posted!  I've been busy studying to take the Iowa exam to offer home and auto insurance and it's got me feeling a little like the picture on the right.  So, I decide to take another test to see if I'm a left brainer or a right brainer.  The result was that I'm 53% left and 47% right.  I guess that makes me undecided.

Anyway, for the last 4 years, whenever I meet someone and tell them I'm an insurance agent, they say "Really!  What type of insurance?"  I say, "Annuities, life, long-term care, accident and health." to which they reply "Oh, do you do homeowners insurance?".  So then I start over, "No, annuities, life, long-ter..."  So, I'm taking this exam so that after next Wednesday, I can just say "Yes".

I'm actually excited to add this new service to my business but the exam is taking all of my brain cells and giving me a mild case of Blogger Block.  I'll be back soon.

What if you wanted to meet me?

One thing that I really enjoy doing is sharing my thoughts and ideas with everyone who reads this.  I try to share things that someone may find useful.  Someday, maybe something I have shared will be of value to you and the timing will also be right.  Then what?

For example maybe you've been thinking about the Home Ownership Accelerator and would like to walk through the simulator together to see if it's right for you. 

You and I would start either playing phone tag or there would be a volley of emails.  Eventually, we would make contact and then be able to discuss whatever it was that you wanted to discuss. 

Well, I want to make it easy and convenient for you to work with me.  So I decided I'd try to provide a way for you to pick a time on my calendar that works for you.   You can schedule an hour-long appointment or just a quick phone call (10 min.).  You request an appointment and it's yours.  You pick a time for me to call and I'll call you.  No more phone tag or email volleys.  How does that sound?

I'm open to any feedback you have on this.  Let me know if you think it's a good idea.

Return of premium term

In a previous post , I wrote about choosing a life insurance policy and talked about the difference between ROP term and traditional term life insurance.  In a nutshell, you get the coverage you need for as long as you need it and your money back if you don't.

I just wanted to share this post where my friend, Art Dinkin, does a very good job of explaining how to analyze these policies to see if the extra premium is worth the investment.

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All I want for Christmas

"What do you want for Christmas? "

"I want a stick and some string."

OK.  Maybe that's a little drastic but, when I was little, I usually got a couple of toys for Christmas and a few clothes.  I was happy and Mom and Dad probably spent $30.  Now it's a race between toys and technology to see who can make you go broke the fastest.  My iPod has as much memory as my old laptop.  I think "Tickle Me" Elmo and Steve Jobs met up a few years back and started it.

Somehow, you still have to save for the future as in an education fund.  It can be challenging to juggle short-term wants and long-term necesseties.  How much do you need to save?  What if they qualify for a scholarship or financial aid?  Can they use the money for something else like a down payment on their first home?  What if they want to just let the money accumulate for their retirement?

When structured properly, an over-funded cash value life insurance policy can provide the flexibility for your children to use the money when they need it the most but, the key advantage is that the cash value is excluded from the aid formula when they apply for financial aid.