Archive for May, 2009

« Older Entries

Do We Need National Licensing for Insurance Brokers?

Friday, May 29th, 2009

Insurance companies have been around for hundreds of years.  Early insurance companies in America found that the best way of distribution was through independent salespeople, or brokers, who would sell their products on their behalf for a commission of the sale.

However, back when states numbered just over a dozen and the West was still uncharted and wild, there was no need for a national streamline process for licensing brokers.  Individual states were left to test, license, and discipline their own brokers.  And that is the way it has been ever since.

A Dawn of a New Age

But now we live in the 21st Century where we have a global trade climate and major insurance sell their products in all states and internationally.  Brokers who sell insurance in multiple states must be licensed in each and every state they do business.  However, there is now legislation in the U.S. Congress to streamline the process for insurance broker licensing.

The current bill in the House of Representatives, HR 2554, would establish a National Association of Registered Agents and Brokers (NARAB) who would be responsible for creating a single set of licensing requirements for all insurance agents and brokers.  NARAB would develop testing and licensing procedures, continuing education, and other standards for insurance producers which would be applicable in every state.

But would NARAB eliminate each state’s insurance agent oversight?  Not at all.  States would still be in charge of supervising and disciplining agents and brokers and to determine licensing fees for their state.

With so many insurance agents and brokers producing insurance sales in multiple states, it only seems reasonable that there be a national licensing standard.  And since this is a unified partisan issue, watch for this bill to pass quickly and set into law by the end of 2009.

Tags: , , , , ,
Posted in Insurance News | No Comments »

Is Condo Insurance the Same as Homeowner’s Insurance?

Thursday, May 28th, 2009

Condominium purchases have skyrocketed in the United States over the last 10 years.  The condo life offers many benefits such as downtown metro living, quality and elegant spaces, and near care-free maintenance issues.  But buying insurance for a condo is not the same as buying insurance for a single-family home.

The Role of The Condo Association

When you purchase a condo you are also buying into an association run by the condo owners.  The association takes care of most rules & regulations around the property, safety & security, as well as most maintenance issues.  In fact you might think of the association owning all of the “outside” and common areas of the condominium building or complex.  That means they are responsible for all outside maintenance issues such as new roofing, siding, and painting, as well as all yard work and parking lot improvements and maintenance.  That also means that the association purchases structure and liability insurance in case of damage or personal injury on all public and common areas.

The Role as a Condo Owner

That leaves you, the condo owner, to be responsible for all “inside” maintenance such as fixing leaky pipes or repairing damaged walls.  A condo homeowner’s policy is much like a renter’s policy.  You need to insure your private property and belongings from damage or theft.  But unlike a full homeowner’s policy that covers all structural damage, liability, and personal property for a house and land, condo insurance will help pay for damage to inside structure as well as liability for injury inside your space and loss of personal property.

Condos are often the way to go for people with a busy lifestyle.  They offer easy, maintenance-free living in a multi-family setting.  Usually condos offer great spaces with spectacular views, and even convenient locations such as downtown living.  And the added benefit to condo life is the affordable insurance offered to condo owners.

Tags: , , , , ,
Posted in Home Insurance | No Comments »

When to Buy Special Travel Insurance

Wednesday, May 27th, 2009

Sure, there are plenty of traditional travel insurance products to choose from when you are out and about touring the country and the world.  Products exist for both frequent and infrequent travelers.  But on what trips would you need special travel insurance when you travel away from home?  Below are some possible special travel insurance options you might encounter.

International Travel

Traveling within the United States is easy.  Even exotic vacations can take you to places like Hawaii and Alaska that are still domestic travel.  And North American travel can be a breeze into Canada and Mexico.  But what if you want to make an international trip to one or more foreign countries?

It is surprising to know that nearly half of international travelers need some form of medical treatment while abroad.  In fact, many people are more surprised to discover that their health insurance plan does not cover treatment in foreign countries.  However, an international travel insurance plan will provide temporary medical treatment while you travel in other countries, as well as offer travel advice, emergency assistance, and contingency planning.

Group Travel

A popular form of international travel is the group tour where a group of 10 to 40 people (or more in some cases) travel on the same itinerary, staying at the same hotels and usually aided by a travel sponsor or guide.  Clubs, church groups, and associations often plan group travel.  A group insurance plan will help with lost baggage, trip cancellation, evacuation, and repatriation for the entire group.

Student Travel

Students who study abroad for a term or for years at another university may do well with a student travel plan.  Student travel insurance will provide medical and prescription coverage, and provide help in emergencies and aid with repatriation back into the United States in case of natural disaster, acts of terrorism, or possible civil unrest.

Tags: , , , , , ,
Posted in Travel Insurance | No Comments »

Why Term Life Insurance is Worthy of Your Consideration

Tuesday, May 26th, 2009

Many people view life insurance as a double billing of both a savings account and financial security for loved ones.  There are many varieties of whole life insurance and universal life insurance that provide a  savings element when you pay premiums, but what if you just want to protect your family from financial disaster in the case of your death?

The Benefit of Vested Savings

In this particular instance, you may wish to consider other options, such as life insurance policies with vested savings. Life insurance policies with vested savings are a safe and conservative way to save wealth, but the returns are extremely diminished.  If you are not looking to pack away some of your wealth, you may be best suited for a term life insurance policy.

Term life insurance is a simple contract between an insurance company and a policy owner, who is usually the insured.  Based on the health and age of the insured, the insurance company wages that they can predict the chances of a premature death and in doing so, they will pay a predetermined death benefit if the insured does pass away during the term of coverage.

The death benefit can be any amount, with as little as $5,000 to pay for funeral costs, and as much as millions of dollars.  Although these options are abundant, affordability is another element of consideration as the amount of potential benefit affects the price of the premium dramatically.  But even a simple term life insurance policy for $50,000 is very affordable for the average working head of household.

Conclusion

Most families don’t want to think about tragedy, but every year there are many families who are left destitute when the main bread-winner suddenly dies and they are left without income or a considerable loss.  Term life insurance can offer peace of mind, however, and at a cheap price.  So, if you are the primary provider for your family, consider putting away several dollars each month toward a term life insurance policy that provides your family with financial means to survive after a potential untimely death.

Tags: , , , , , ,
Posted in Life Insurance | No Comments »

4 Car Insurance Myths You May Not Know

Monday, May 25th, 2009

The methods of pricing car insurance can be like a cloak and dagger operation at times.  Each insurance company has their own statistical method for pricing their products.  But many people widely believe that insurance companies use some of the methods below to determine premiums.  However, you may be surprised to find out that these are simply myths and have no bearing on pricing at all.

Car Insurance Myth #1: The color of the car determines a portion of the premium.

Does the owner of a red Honda have to pay more than an owner of a white one?  No.  The color of an automobile is irrelevant.  What does matter is the automobile’s year, make, model, body type and engine size.

Car Insurance Myth #2: My credit score has no bearing on my premium

Not true.  Insurance companies are almost universally using one’s credit score as a factor in premium determination.  Your ability to continue paying loyally will help reduce your insurance costs.  However, late payments on your credit score can jack up your rates considerably.

Car Insurance Myth #3: No-Fault insurance only pays if I’m not at fault.

No-fault is widely misunderstood.  Many people believe that no-fault insurance will only pay if they are not at fault in an accident.  In actuality, no-fault is determined by state insurance laws, and means that the insurance will pay regardless of who is at fault in a no-fault state.

Car Insurance Myth #4: If my friend drives my car then his insurance is responsible in case of an accident.

Wrong.  Your car is your responsibility no matter who drives.  That means if your friend gets into an accident with another car and injures another person, your insurance company pays and your premium will be subsequently affected.

As you can see, there are many myths - most which need to be debunked. It is important to perform dilligent research to fully understand the elements of insurance, and it is our goal to aid you in this process.

Tags: , , , , ,
Posted in Auto Insurance | No Comments »

Is Earthquake Insurance Worth The Cost?

Friday, May 22nd, 2009

Surprisingly, most homeowners who live in an active earthquake region do not have earthquake insurance along with their regular homeowners policy.  But when an earthquake hits you can bet that insurance companies are flooded with phone calls from homeowners suddenly aware of the benefits of the coverage.

Most homeowners insurance policies have exclusions for earthquake damage.  Especially in regions of the country where active faults exist.  Insurance companies like to stack the proverbial deck in their favor as much as possible, so anyplace there is a possible earthquake will likely not include earthquake coverage on a basic policy.

So, what can you do if you own a home in earthquake-prone territory?  There are many things to consider about earthquake insurance in addition to a regular homeowners policy.

Premium cost - Earthquake insurance can be just as, and sometimes even more than, your regular homeowners policy.  You can bet that high risk areas like Seattle or San Francisco are big red flags to insurance companies.  If you want to protect your financial investment in your home from earthquake damage or destruction in one of these places, expect to pay for it.

Deductible - Also, insurance companies will further protect their risk involvement by establishing high deductibles.  It’s not surprising to see deductibles of $50,000 to even $75,000 on earthquake policies.  That means if there is damage from an earthquake that is less than your high deductible amount, you are still responsible for the total cost.

Retrofitting - One way to protect against earthquake damage and save on earthquake insurance premiums is to retrofit an older home, or buy a newer home constructed with earthquake resistant materials and architecture.  Retrofitting means adding elements to match basic seismic standards.  Flexible piping, sheer panels, and bolting the foundation are examples of earthquake retrofitting.

Earthquake insurance is expensive. However, if you live in earthquake territory, have considerable equity in your home, and you cannot afford to rebuild your home on your own, an earthquake policy may be sound financial advice.

Tags: , , , , ,
Posted in Home Insurance | No Comments »

Will AIG Survive A Restructure?

Thursday, May 21st, 2009

What would you do if your insurance company, a leader in the industry with billions of dollars of assets, suddenly said that they are not financially secure?  Drop it like a hot rock, most likely.  That’s what many are doing about American International Group, Inc (AIG).  AIG was one of the big world leaders in financial security and strength who offers both insurance and financial products.

Loss of Share Value and Plummeting Client Retention Ratios

When the U.S. Government stepped in and seized control of the company and paid a whopping $85 billion in bailout funds in September of 2008, the people responded.  AIG stock went from a high of over $72 per share within the last three years to mere pennies. And what about business?  How many new customers do they obtain and how many current customers have they lost?

Though AIG won’t say specifically, their 1Q 2009 financial results are not good, and they contribute a part of the loss to restructuring and “market disruption”.  Well, if I had my life insurance through AIG I think I might “disrupt” my policy and go with someone else as well.

The Rebuilding Process

AIG has a long way to go before they are a solid and functional insurance company once again, but it can happen.  Though they have been chastised about paying over $165 million in executive bonuses, they have recently announced a sale of a big asset in Tokyo where a prime real estate deal was sold for $1.2 billion.

If AIG wants to commit to restructuring they should do away with the former and do more of the latter.  Besides, what company struggling for survival wants to retain a bunch of executives who helped bring about their financial mess?  It’s probably time for a new, fresh set of executives who can both effectively re-align assets, and return confidence to investors, customers, and future customers.

Tags: , , , ,
Posted in Health Insurance, Introduction | No Comments »

Can You Afford to Live Without Health Insurance?

Wednesday, May 20th, 2009

Let’s face it - health insurance costs have risen so dramatically over the last 10 to 15 years that it seems almost better to not have insurance.  Many individuals and families who do not have the benefit of company-sponsored medical insurance have found that they simply go without and pay medical costs out-of-pocket as they come up.  The question remains, can saving money on health car premiums be enough to pay for medical costs?

The Financial Breakdown

Comprehensive medical premiums for a family of four are in the range of approximately  $1,000 per month, and more in some higher cost-of-living areas.  A year’s worth of premiums add up to be about $12,000, and after 10 years that family will have paid $120,000 just in premiums alone.  The question is, will that family have received $120,000 in medical services during that time?

If they’re lucky, no.  Though it seems to be illogical to pay $120,000 in order to receive less value back, that’s what insurance is all about.  Transferring risk.  The risk of paying more than $120,000 in medical claims over 10 years falls upon the insurance company.

Sure, if preventative maintenance and checkups is all a family does they should count their blessings.  But what if little Jimmy breaks his arm?  X-Rays and other laboratory costs add up quickly, as well as regular checkups.  And what if little Jenny contracts pneumonia and is hospitalized for a few days?  Overnight stays in the hospital just for observation and monitoring could be from a couple thousand to upwards of $10,000 per night if a lot of expensive equipment is used.  And what about a worst-case scenario such as being involved in a devastating accident requiring weeks or months of medical treatment and long-term physical therapy afterward?  One such incident may render a hospital bill of $150,000 or more! Are you prepared to pay that out of pocket?  And how will you pay if you are not able to work?

Medical insurance may seem to be a burden.  But it’s a small burden compared to the actual cost of treatment.  Keeping medical insurance as part of your budget is often a struggle, however, it does pay out considerably when it comes time to make a claim.

Tags: , , , ,
Posted in Health Insurance | No Comments »

Do You Need A Terrorism Rider on Your Travel Insurance?

Tuesday, May 19th, 2009

Travel insurance can be very helpful to get people out of a travel jam.  Airlines may suddenly declare bankruptcy.  You may have an emergency that prevents you from taking an expensive vacation.  Or perhaps coordination of your travel agency to the overseas hotels were blundered and there’s no reservation in the books.

In all these instances travel insurance is there to help get travelers out of a jam, back home, or refund the money spent on a vacation not taken.  But in these unstable times of seemingly random terrorist activity in virtually any country, does basic travel insurance cover you if something should go wrong?

Many travel insurance companies are now offering a terrorism rider to travel insurance policies.  With a terrorism rider you can get an additional amount, typically up to $50,000, of additional lifetime medical coverage for treatment and care for injuries or illness sustained as a result of an act of terrorism.  Insurance companies always like to stack the deck in their favor so here are the typical conditions:

  • The injury or illness cannot result from biological, chemical, or nuclear weapons.  However, if there is injury due to a bombing, for instance, your terrorism rider would be there to help pay for those medical costs.
  • You must have no direct involvement in the terrorist act.  Reasonable.
  • The act of terrorism is not in a country that has been listed under a terrorist travel warning within the last 6 months before you arrive.  Also, you may not have failed or refused to depart from a country after a terrorist warning has been issued for that country.  So, heed the warning of your government - if you have made travel plans to a country that has recently been given a terrorist warning, don’t go!

Travel insurance for those who travel frequently or plan expensive trips is always a good recommendation.  If you are concerned about a potential terrorist act in a destination country, check with your insurance agent about adding a rider to help give you peace of mind.

Tags: , ,
Posted in Travel Insurance | No Comments »

Is Auto Insurance Sexist?

Monday, May 18th, 2009

Usually when men or women get preferential treatment over the other sex it is called discrimination.  However, throw in actual statistical data that proves one sex is better than the other and it’s not profiling or sexist, but legitimate business practice.  Fortunately for women, they have been found to be the preferential driver for insurance companies.

Yes, women can get cheaper car insurance rates than men.  Why?  The simple statistically proven fact is that women tend to be safer drivers and avoid car accidents more than men.  And the accidents that women are involved in generally result in less expensive claims.  Fender benders unite!

It’s hard to dispute the facts and statistics.  Particularly, it is the younger women who end up the safest.  Women ages 18 to 25 simply do not have as many accidents, do not receive as many speeding tickets, and are not involved in as many moving violations as their male counterparts.

Perhaps it’s the experience of freedom and exhilaration in a car young men have in their teens and early twenties that push them to drive faster and take more risks.  How many news stories have you seen lately where a young male driver was in a fatal accident after losing control while racing down public streets?  It’s a recurring and sad news story.

But the record shows that women of all ages drive less, wear their seat belt more often, and drive shorter distances than men.  In addition, women with children tend to be safer and more careful on the roads as well.

What is the premium savings for women?  It differs from company to company, but the difference is not much.  But every little bit helps.  If you are a female with a clean driving record, be sure to ask your auto insurance agent about the possible savings you could get simply “‘because I’m a woman.”

Tags: , , , , ,
Posted in Auto Insurance | No Comments »

« Older Entries