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16 things to know about insurance

Insurance can be rather mind boggling if you’re not versed in it like the Insurance kings we have here. They traveled through galaxies unknown to learn the knowledge they need for their job. Here are a few answers to commonly asked questions regarding insurance:

Check the terms page if insurance lingo confuses you!

 

1. What kind of insurance do I need?

If you lose or break your things, look into insurance that will insure your possessions.

If you lose or break your life, look into insurance that will insure your life.

If you lose or break your immune system, look into insurance that will insure your health.

If you lose or break your finances, look into insurance that will insure your finance.

2. So for possessions, does this mean homeowners insurance is the most important one?

Most likely since a home is the biggest investment most individuals will be making. It’s a good idea not to skimp out on homeowners insurance. Guaranteed-replacement coverage is a good idea as well since it mandates that the insurer will replace your home if it gets wrecked no matter how much it costs. If you’re insuring a dollar amount and it’s not enough, chances are you’ll have to pay the difference.

3. Great! I just signed the papers and I now have guaranteed-replacement coverage, I’m golden right?

Did you read what you signed?

No…

It’s important to know what your homeowners insurance covers since some items in your home are often not part of the policies or is inadequately covered. Things like HDTVs, home entertainment system, antiques, collectibles, jewelries, and art are a few examples of items that may not be fully insured. Ask for riders that will specifically cover them.

Also, homeowners insurance doesn’t include flood or earthquake damage so give your local municipal office a call to see if your home is in a flood or earthquake plain. If it is, ask your local private insurer about coverage.

4. Okay great, I also have my own office in my home. Homeowners insurance covers that too right?

Wellll…no. A lot of home-office equipment like computers, laptops, fax machines, and copy machines are not covered with conventional homeowner policies. You’ll have to sign up for a separate insurance policy to cover them. If customers/potential psychopaths visit you at your home office, you’ll need liability insurance as well. Talk to your local insurance agent to make sure every single nook and cranny is covered.

5. Okay, so what if someone comes to my office, yells at me about my loud dog, makes fun of my children, falls on a door knob, and then sues me – will my homeowners insurance cover that?

Assuming door knob doesn’t mean a fist, your homeowner policy has liability limits so you will not be completely covered. An option you can look into is an umbrella policy that will add additional coverage, up to $1 million, at an affordable price (which varies from state to state). It also gives you additional liability coverage for your sweet mustang in the back.

6. Do I have to get car insurance?

Short answer: yes. Long answer: Yesssss.

Every state requires some kind of automobile insurance, unless you live on Mars. If you did live on Mars, it would be insane to drive without some form of insurance. If you drove insured and crashed into a flying saucer and killed an alien life, say goodbye to your space money.

7. Okay you’ve convinced me…but why is it so expensive? This is a lot of space money! How will I be able to hold down the cost?

Liability protection, which would consist of bodily injury protection and property protection, is the biggest blow to your wallet. You should not skimp out on this part. Try looking for coverage of at least $100,000 for property, $100,000 per person, and $300,000 per accident. If you can push for more, uninsured motorist coverage also protects you if you get into an accident involving a driver with no insurance.

If it’s a bit much for you, try raising your deductibles. By pushing up deductibles up to say $500, or even higher, can cut your premiums significantly. An idea is to consider eliminating collision coverage, which covers any damage to your car. It’s not wise if your car is new or you care about how your car looks but it’s a thought if a few dings isn’t that much of a big deal to you.

Other way to cut cost:

• Obey the laws and don’t get any tickets. A good record gets good deals.

• Insure every vehicle with the same company(there are packages that cover multiple vehicles)

• In school? Let your insurer know if your good grades can cut some costs.

8. Okay, what about life insurance? Do I need it?

Do you have anyone that depends on you financially? The most basic life insurance covers a person’s income. If nobody depends on your income (aww ?), then life insurance is optional. If you tied the knot or have someone that needs your money for a living, life insurance can be an essential form of protection. A guardian angel you might say!

9. How do I found out how much life insurance I will need?

There are a few ways you can go about finding that information since it’s hard to say exactly.

• Speak to an insurance agent at Lords Insurance

• Try some of these nifty Life Insurance Needs calculators:
http://www.lifehappens.org/life-insurance/life-calculator
http://www.cpasitesolutions.com/content/calcs/LifeInsurance.html
http://www.insure.com/articles/interactivetools/lifeneedsestimator/calculate.jsp

10. You’re blowing my mind! What kind of life insurance should I consider?

Term insurance is the best for more humans(does not apply to robots or aliens). It’s the simplest and cheapest form of insurance you can get. All you have to do is pay the premium and you’re insured! If things fall together just right, your investment in the difference between what you pay for term insurance and what you would pay for “whole life” or cash value insurance, you will end up with a large amount of cash.

11. Alright then, should term life insurance be the only thing I buy?

Not quite. If you think you’ll be unable to invest the difference, cash-value programs are a way of forced savings. Some are tied to mutual funds that can offer reasonable rates of return.

Also, life-insurance death benefits are tax exempt and can provide an effective tactic for passing along assets. The downfall to mots cash-value plans is that they’re more expensive than term insurance and you’ll have to hold onto them for a set number of years so you’re not hit with charges.

12. Do I have to get health insurance?

Yes and no.

Millions of Americans are lacking health insurance but that doesn’t mean you have to be one of them. Many employers will offer health insurance to employees at group rates. They usually just boil down to two options: managed care and fee for service.

With managed care(HMOs, PPOs, etc), the employee is responsible for co-payment(usually $10-$30) for doctor visits and other services. In exchange, the program specifies certain professionals you may select from. Managed care programs are popular for making you wait days or weeks before you get to see someone.

Fee for service has a more expensive premium than managed care. The biggest advantage of this though is that you can usually see any doctor you want! Fee for services policies usually pays around 80% of expenses after deductibles, and then you’re responsible for the remaining amount. Like other insurance, you can tailor fee-for-service premiums by increasing your deductibles.

If you can’t get insurance through your employer or are self-employed, make sure you get something. Go to http://lordsinsurance.com and get a quote.

13. Cough cough. I’m sick, I broke my leg, and I can’t work. Does health insurance help me since I’m sick and injured?

Not entirely. Health insurance helps you with paying sweet-sweet medical expenses. Disability insurance is what keeps your income flowing if you can’t work for a period of time. Disability insurance is commonly overlooked but it’s the one that most working families need. It pays you an income if you’re unable to work.

Look out for policies whose waiting periods are no longer than 90 days. This is the time you’ll have to wait until you start getting disability payments.

14. So tell me about this long-term care.

Hey! That wasn’t even a question!

Long term care insurance helps pay for nursing and other expenses when you get fragile and old. It’s a good thing but premiums are expensive and gets more expensive as you get older so you’ll have to consider whether you can afford the increasing premium.

15. What is COBRA?

(hiss)

Oh! Right. Insurance.

COBRA means Consolidated Omnibus Budget Reconciliation Act of 1985. Under COBRA(hiss), if you resign from a job or are laid off for any reason besides ‘gross misconduct,’ you’re can still be covered under your former employer’s health care plan up to 18 months. In most cases, your close family members(kids, spouse) are also eligible. The downside is that the premiums are quite pricey since you’re paying both you and your former employer’s share. The whole concept of COBRA(hiss) is remain covered until you’re able to arrange another health insurance plan.

16. Gee you’ve been a big help! How can I ever repay you?

Well a backrub would help a lot. Or you can visit us at http://www.lordsinsurance.com. Whatever works.

Some other tips I have is to read your policy, ask for a discount, and keep record of your personal property and belongings. If you can’t prove that your wife’s ring was really made of space diamonds, your claim may be rejected. Prepare yourself and keep records!

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Written by lordsinsurancelog

September 27, 2010 at 10:30 pm

Posted in Insurance Tips