Guides to avoid mistakes Buying Life Insurance

Avoid mistakes Purchasing Life Insurance

While buying insurance the mistakes are those made over and over—in fact, countless times over the years—and continue to be made. 

Each of these life insurance mistakes has two things in common: First, each has potentially serious consequences in terms of both expense and aggravation. Second, each can easily be avoided or, if found in time, can be corrected quickly and inexpensively. There is a relatively simple solution to each of these ten common mistakes.

Who cares if these ten mistakes are not found and fixed? Certainly not the IRS. It profits from the mistakes of omission or commission made by others. The parties who care most about these mistakes are those that must make do with less or must do without. 

The irony about all these errors is that they do not involve complex tax or other laws, and—perhaps for that very reason—are seldom discussed in law school, estate planning council, or CPA courses. Yet for a professional advisor to ignore or overlook them may be as poor or malpractice as to draft a will improperly, fail to suggest a marital/nonmarital trust, or neglect to file a tax return on time. And most of these mistakes can be spotted easily—even if you are not a professional advisor.

Life insurance may be one of the most important purchases an individual (and/or his or her business) will ever make. As is the case with any important purchase, it pays dividends to avoid the pitfalls into which a buyer can so easily fall. These common mistakes can be avoided by following the simple checklist.

Checklist for avoiding mistakes

1.       An insured’s estate should not typically be named the beneficiary of insurance.

2.       At least two backup beneficiaries should be named.

3.    At least every three years, a written confirmation of the status of policies and beneficiaries should be requested from the insurer’s Home Office.

4.      The insurance product should match the problem. Be sure the insured has the right policy for his/her/its needs.

5.      Above all, check to be sure there’s enough life insurance to provide food, clothing and shelter, and to pay off debts so that those the insured loves can continue in their present lifestyle.

6.       Don’t name minors as outright beneficiaries. Consider a trust or settlement option.

7.       Consider a transfer of life insurance to others to save federal estate taxes.

8.      Check to see if your business or practice can provide your family with insurance on a more cost-effective basis.

9.     Remember that term insurance by definition runs out and contractually becomes more expensive as you grow older.

10.   Don’t buy life insurance as though it were a commodity. The knowledge of the advisor with whom you deal and the integrity of the insurer and their commitment to service can make a major difference as to how cost-effective life insurance will be.

Do's and Don'ts when buying Travel Insurance

Photo credit: dailymail

Holiday season has arrived. If you plan to travel, do not forget one vital part - insurance. Here's my guide to finding the best deal.

When buying travel insurance, some do and not to do things here have been able to do

• Your travel insurance plan, build in time, the way you make plans for your visa and other things
• Undergo compulsory medical check and obtain the required medical reports to fully and truthfully fill out the proposal form
• Visit term plan, build in time and make sure your insurance covers the whole period
• If you increase the period of cover, the cover and the insurer before ending its plan to submit the required documents
• Make sure you fully read the policy document, and claims servicing agency and keep note of the contact details.
• If you are cutting short your travel period, check your policy to see if you are entitled for a refund.

Do not do

• Avoid the last minute not to my travel insurance.
• Don’t get pushed into taking a cover only as recommended by your travel agent. Get as much information as possible and select your own choice as possible.
• Don’t get tempted to opt for the cheapest cover as it might not meet your needs.

Happy Traveling...

Tips For Buy Travel Insurance

Photo credit: telegraph.co.uk

Travel insurance provides coverage when you travel . Travel insurance , insurance companies can be addressed by different names . It is important that you check and understand the policy within the country or overseas travel is covered Cruises or both . Travel insurance you and / or your family travel accidents , travel time, unexpected medical expenses , loss of baggage , loss of passport etc. and flights delayed or interrupted , or delayed baggage provides protection from losses due to arrive etc.'s .

So If you're planning a holiday, remember there's much more to the process than simply booking flights and accommodation. For example, you'll have to find your passport and check that it's in date, as well as ensuring that you fulfil the appropriate visa requirements for your chosen destination. And though many people see it as an unnecessary extra expense, it's also essential to book travel insurance before getting on the plane. After all, it's easy to assume that nothing bad will befall you on your trip but as 2010's volcano ash cloud travel crisis showed, anything can happen to disrupt your holiday. To ensure that your travel insurance is well-priced and fits your needs, here are a few tips to bear in mind.

First, search the internet exhaustively to find the best deals on travel cover, rather than purchasing it from your tour operator or airline. Insurance comparison sites have made it much simpler for consumers to locate the most competitive rates on travel insurance, helping save a significant amount of money in the process. However, it's important to not simply opt for the cheapest insurance deal. Instead, compare the rates of reputable providers with well-rated cover options to ensure your cover is of a high quality. Also consider whether it would be more economical to purchase annual cover rather than single trip insurance. Before purchasing, read the fine print carefully.

Does the travel insurance provided meet all your holiday needs? For instance, if you're going on a skiing holiday, remember that many insurers will not include winter sports cover in a standard insurance policy. You will either have to pay an excess sum or look for specialist winter cover, and these policies may still not provide cover for off-piste activities. Often, this rule also applies to any trip with a high risk factor, like extreme sports holidays, and travellers on gap years or extended backpacking trips may also need specialist cover.

In addition, You'll also need to check whether your preferred travel insurance provider actually provides cover for your chosen destination. Usually, if official government advice recommends against travel to a particular country, insurance policies will not cover holidays to these destinations.

Number of travelers and age also influence the price of travel insurance. If you're travelling as a couple, with family or in a group, it can sometimes be cheaper to buy your travel insurance altogether as one policy. In particular, insurers may provide discounts for couples travelling with children, though these policies may only cover group travel and not individual holidays.

Finally, don't rely solely on comparison sites to find the best deals. Once you've decided which insurer best suits your needs, visit their website or telephone them to see what deals or discounts are available direct. If you have specialist needs – for instance, if you're over 65 years old or you're a frequent business traveller – these insurance providers may be able to offer you bespoke cover options.

Medicare vs. Medicaid

Though people are aware that there are two government-run health-care programs available, the terms “Medicaid” and “Medicare” are often confused or used interchangeably. The two terms sound extremely similar, making it easy to switch them, but these two programs are very different. Each is regulated by its own set of laws and policies, and each is appropriate for different sets of people. It is important to understand the distinction between these programs as well as the details of each so that each person can select the program that is right for his or her situation.

For retirees navigating the government’s senior health care system for the first time, it can seem confusing. Let’s take a look at the two big health insurance providers: Medicare and Medicaid. Americans aged 65 or older are eligible for Medicare. There are two main plans under Medicare, Plan A and Plan B. Typically, Plan A covers hospital insurance and Plan B covers medical insurance (i.e. doctor visits). Plan B may come with a small monthly fee.  Medicaid is for citizens not qualified to receive Medicare. Unlike Medicare, Medicaid is distributed through federal-state programs for citizens of low-income. Medicaid can be extended not only to cover the elderly, but it may also cover children, parents of eligible children, pregnant women, and people with disabilities who cannot otherwise afford insurance.

Overview

Medicare is a policy designed for citizens aged 65 and older who have difficulty covering the expenses related to medical care and treatments. This program provides support to senior citizens and their families who need financial assistance in order to fulfill the costs of their medical needs. Persons who are under the age of 65 but are suffering from particular disabilities may also be eligible for Medicare benefits. Each case is evaluated based on eligibility requirements and the details of the program. Patients in the final stage of renal disorders can also apply for the benefits of a Medicare policy.

Medicaid, on the other hand, is a program that combines the efforts of the state and federal governments in order to assist families in low-income groups to cover the expenses of health care. This program aids families in paying for major hospitalizations and treatments as well as routine medical care. This program was designed to help those unable to afford quality medical care and who do not have other forms of medical coverage due to strained finances.

Eligibility

In most situations, eligibility for Medicare is based on the age of the applicant. A person must be a citizen of the United States and 65 years of age or older to qualify. Any US citizen or permanent resident that is at least 65 years old is eligible to apply for Medicare. Premiums and specific Medicare plan eligibility will depend on how many years of Medicare taxes have been paid. The exception to this is people who are younger than 65 but have certain documented disabilities. Generally, people who receive Medicare benefits are also receiving some form of Social Security benefits. Medicare benefits can also be extended to a person who is eligible for the Social Security disability program and is also the widow(er) age 50 or older or the child of a person who worked a minimum length of time at a government job and paid Medicare taxes.

Eligibility for Medicaid is based primarily on income. Healthcare.gov states that most adults who are in the low-income group who are not able to access affordable health insurance through their job are ineligible for Medicaid. The Affordable Care Act, however, has extended coverage to fill in the health-care gaps for those with the lowest incomes, establishing a minimum income threshold that is constant across the country.

For the majority of adults under the age of 65, eligibility is an income lower than 133 percent of the FPL (Federal Poverty Level). According to Healthcare.gov, this amount is approximately $14,500 for an individual and $29,700 for a family of four. Children are afforded higher income levels for Medicaid and CHIP (Children’s Health Insurance Program) based on the individual standards of their state of residence. There are also special programs within the Medicaid program that extend coverage to groups in need of immediate assistance, such as pregnant women and those with pressing medical needs.

Coverage
There are several subcategories of the Medicare program that offer coverage for different aspects of health care. Medicare Part A, also referred to as hospital insurance, is the subcategory that is offered without premiums to all individuals who meet the eligibility requirements and have paid (or are the spouse of a person who has paid) Medicare taxes for a minimum of 40 calendar quarters in the span of their life. Those who do not reach eligibility to receive Part A premium-free may have the option of purchasing this part. Part A is associated with skilled nursing care, hospital services, hospice services, and home health care. Medicare Part B is considered the medical insurance portion. It offers coverage for outpatient hospital care, physician services, and other such services traditionally covered by health insurance plans.

The benefits that are covered by Medicaid vary by the issuing state, but there are some benefits that are included in every program. These include laboratory and X-ray services, inpatient and outpatient hospital services, family planning services such as birth control, nurse-midwife services, health screenings for children and applicable medical treatments, nursing facility services for adults, and surgical dental services for adults.

Tips to Get the Insurance Claims

A formal request to an insurance company asking for a payment based on the terms of the insurance policy. Insurance claims are reviewed by the company for their validity and then paid out to the insured or requesting party (on behalf of the insured) once approved.

Homeowners are tallying up the damage inflicted by a brutal winter, and insurance claims are sure to mount with each discovery of a damaged roof or burst pipe.

The challenge for many is knowing whether they are getting the full compensation their policies should provide.

"We expect insurance companies to stand behind us when disaster strikes, but far too often we see insurance carriers deny, delay and underpay legitimate claims," says Phillip Sanov, a Houston-based attorney and head of the Lanier Law Firm Bad Faith Insurance Practice Group.

Insurance companies, increasingly focused on their bottom line and appeasing shareholders, will try to cut corners when it comes to claims, Sanov says.

"Its not necessarily the individual [claims adjuster] who comes out and has his feet on the ground," he says. "He has to answer to two or three levels above him and do what he's instructed to by the corporate office somewhere. It's a trickle-down effect."

Underpaying claims happens as often as it does because many policyholders have little understanding of the nuances of their coverage. There are also emotional considerations. After snow crashes through a roof or gale-force winds shatter windows, many homeowners just want to deal with the emergency at hand, avoid a prolonged battle and cut their losses.

"Insurance companies know that nine out of 10 policyholders are just going to give up and say, 'It's not worth it, I don't want to fight anymore,'" Sanov says. "It's only 10% to 20% that will really pursue a claim and get an advocate to fight for what they deserve."

The Florida State Legislature's Office of Program Policy Analysis and Government Accountability issued a report last year that looked at the relationship between public adjusters, policyholders and the state-run Citizens Property Insurance program -- an insurer established for those otherwise unable to afford or get coverage -- in the wake of the 2005 hurricane season.

That audit found that policyholders who retained public adjusters for their claims got 747% higher compensation than those working solely with their insurance company. For non-hurricane claims, policyholders got 574% higher compensation.

"The average insured does not know what he is entitled to," says Joseph Zevuloni, president and CEO of Zevuloni & Associates, a Florida-based public adjusting firm. "They will look at something that is broken and try to figure out what it will cost to fix. However, there are other damages they are not trained to look for or know any better. By the time they find out, the insurance company may say that they waited too long, never reported it, that they don't deserve it or it is not included in their policy."

Six steps homeowners should be prepared to take before and after filing a claim:

Carefully Review Coverage

Don't wait for an emergency or need to file a claim before you fully review and understand your existing policy. Before filing a claim, review your policy in light of the damage or have a professional do so to fully understand what your policy covers and what it doesn't. Coverage should be periodically reviewed to make sure it is adequate and fits your needs.

"Examine your policy ahead of time and know what they are paying for," Zevuloni says. "The average consumer who goes out and buys a policy has no clue what it actually says. Many terms and much of the language are intentionally very ambiguous. The average consumer cannot interpret it accurately without some professional assistance."

A policyholder may be underinsured or face exclusions for things they need.

"Let's say your house was built 30 years ago and it doesn't conform to the same building standards as today," Zevuloni says. "If you apply for some kind of a building permit they will require you to do certain things to bring it up to code. The policy should provide for that. If it doesn't have that language, you are out of luck."

Take Photos and Video

The availability and ease of digital cameras allows homeowners to provide the insurer with "before and after" documentation.

"A week before a storm hits, go take pictures of your walls and your roof," Sanov says. "The most reasonable thing for a person to do is to take pictures inside their home, of the walls and the ceiling. The carrier will not be able to claim damage was pre-existing or normal wear and tear."

Document the Damage

Beyond photographing or making a video to show damages, homeowners can hire their own adjuster, who will act independently of one provided by the insurance company.

Keep track, and have duplicate copies of all estimates and receipts. Also, repare a detailed inventory of all damaged possessions, with their approximate age, initial price and estimated cost to replace.

Make Temporary Repairs

Don't wait for an insurance adjuster to start making temporary repairs. Broken windows and leaking roofs should be fixed right away so the insurance company cannot dismiss some claims as the result of waiting too long to do so. Save all receipts and documentation, as the insurer will likely reimburse most of these expenses.

Don't Assume Something Isn't Covered

Just because a claim is initially rejected doesn't mean the policy doesn't say otherwise.

"This happens to us all the time -- an insured will call in and say their claim was denied because mold is not covered and even their agent agrees," Zevuloni says. "But if the mold was caused by a water leak or water damage, it may be covered. If there is causation, the coverage may be limited to $10,000 to $15,000 on most policies, but it is covered."

Gird for Battle

"It does become more of a fight," Sanov says. "You hate to talk in those term, but policyholders are fighting with their insurance company. As claims mount and each adjuster is given a bottom line to preserve, the problems multiply and become greater and greater all the time. It is hard, in the position I'm in, to say anything in defense of them, given the way I've seen policyholders treated."

For those concerned that countering a claim will be costly, Sanov says most attorneys and public adjusters work on a contingency basis. Many states also allow the cost of such expertise to be reimbursed by an insurance company if an initial claim is found to have be inadequate.

Policyholders need not fear their insurer dropping them or raising rates if they challenge a payout. "They will not drop you because of a claim," Zevuloni says. "They will only drop you if you are a risk to them -- if they find out, for example, that you store propane tanks in the house or you have exposed wiring."

Tips Insurance Planning

Insurance is an important part of financial planning — but understanding insurance and buying the right product can be tricky. From whole to term life, riders to convertibility clauses, how do you make sense of all the choices? Most people rely on the expertise of their insurance advisor, broker, or sales representative to help them make the right decision. Yet, for some people, insurance representatives have developed a bad reputation, and many people do not trust the “recommendations” they receive.

From my own experience in the insurance industry, and knowing how representatives are trained, I wouldn’t trust many insurance sales reps either. Here are some steps you can take to ensure you get the right product for the right price:

•     Understand your needs. No one understands your financial situation better than you. That means you should avoid letting someone else tell you how much protection you need. You can get a rough estimate of your insurance needs by adding together your debt, estimated funeral costs, and six months to a year of income replacement. [J.D.'s note: One common rule of thumb is to multiply your yearly income by between 5 and 10, using the lower level if you don't have many dependents and few debts, and the higher level if you have larger debts and multiple dependents. But Ray is right: understand your own needs.] Taking stock of your financial policy can allow you to select the right policy for your needs. As sales representative, we were trained to sell large policies. Remember, you may not need an exorbitant policy — you need the policy that’s right for you and your family’s financial situation.

•     Understand term insurance versus permanent insurance. Understanding the difference between term and permanent life insurance (such as whole life) can help you make an informed decision about your insurance needs. Today, a term insurance policy should be able to cover most of your debt and financial needs. In turn, you may not need to purchase a whole life policy. Try not to be sold by the “what if” scenario you might hear from an insurance sales rep. Insurance companies traditionally make more profit from whole life policies than term policies, so be prepared to hear a sales representative promote whole life as the best possible choice (even though it might not be the best fit for your needs). Remember, buy what you need and make adjustments as changes become necessary. Term insurance is typically renewable and should have a convertibility clause which allows you to make changes in the future. There are certain situations where a whole life policy maybe more advantageous than term; however, do not purchase it simply because your sales representative told you should.

•     Speak with an independent broker. These brokers will have access to many more products than just one firm can provide. When I worked as an independent broker, I was able to offer much more to my clients than just a company product.

•     Avoid one-meeting recommendations. If your broker makes a recommendation in the first meeting, you know that they have not really analyzed your situation and looked for best options. So just say, “No, thank you” and keep researching.

•     Understand how the advisor gets paid. Find out if they are compensated through commission, fee-plus-commission, or fee only. If there is any commission involved with the sale, make sure to look at all alternative products available. With commissions, the advisor may have a conflict of interest. Just because your advisor is commission-based doesn’t mean they are bad — just ask more questions with them. I always worked on 100% commission, but I would give my clients several options and disclose if I got paid differently.

•     Recognize that insurance is for protection — not investing. Term insurance provides protection only, without a savings component. Whole life and universal life policies have a savings component and are much more expensive. You are almost always better off just paying for term insurance, and using the cost savings to invest elsewhere.

•     Ask the tough questions. Don’t be afraid to ask the advisor questions. You should know the product inside out before buying it. Is the policy renewable and non-cancelable? How long are premiums guaranteed for? Is there an accidental death rider? What are the exclusions?

•     Watch out for “know-it-all” advisor. If the advisor answers all your questions without referring to anything, or pretends she “knows it all”, chances are that she does not. Insurance policies are complicated, and even the best advisors do not know every product 100 percent and may have to look things up. There is nothing wrong with that.

•     Compare similar products. When you price shop, make sure you compare similar products.

•     Don’t replace old whole-life policies. If you have had a whole-life policy for several years, try not to replace it. You may lose all the premiums you have paid. You may also have to pay new administration fees (if applicable), and reset some clauses (such as the suicide clause). If your situation has changed and you need more insurance, just buy more. (This warning does not apply to term life.)

•     Do not buy expensive riders. The advisor might ask you to add on all types of riders. Stay away from them unless you fully understand them and need them. Again, in training there was always an emphasis on selling riders. Often I didn’t see any benefits to the client.

•     Do your homework. Make sure you do your homework before purchasing an insurance product. Make sure it fits your needs and budget, and make sure you understand the contract. The advisor is obligated to explain it to you. Don’t sign until you understand the contract.

•     Take a 30-day free look. You have 30 days to look at the policy and understand it. If you are not satisfied with it during that time, cancel the policy and you will get your premium back.

•     Keep it simple. Do not make your insurance planning complicated. Because it is based on protecting your family, it should be based on your needs. Don’t fall for all the bells and whistles the company may try to sell to you.

I hope these steps will help in your insurance planning. The basic idea is to educate yourself by doing your homework so that you can understand what you are buying.