Why Should I Buy Life Insurance?

Written By Charlotte Insurance on November 20, 2010. It has 0 comments.

Many financial experts consider life insurance to be the cornerstone of sound financial planning. It can be an important tool in the following situations:

  1. Replace income for dependents
    If people depend on your income, life insurance can replace that income for them if you die. The most commonly recognized case of this is parents with young children. However, it can also apply to couples in which the survivor would be financially stricken
    by the income lost through the death of a partner, and to dependent adults, such as parents, siblings or adult children who continue to rely on you financially. Insurance to replace your income can be especially useful if the government – or employer – sponsored benefits of your surviving spouse or domestic partner will be reduced after your death.
  2. Pay final expenses
    Life insurance can pay your funeral and burial costs, probate and other estate administration costs, debts and medical expenses not covered by health insurance.
  3. Create an inheritance for your heirs
    Even if you have no other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries.
  4. Pay federal “death” taxes and state “death” taxes
    Life insurance benefits can pay estate taxes so that your heirs will not have to liquidate other assets or take a smaller inheritance. Changes in the federal “death” tax rules between now and January 1, 2011 will likely lessen the impact of this tax
    on some people, but some states are offsetting those federal decreases with increases in their state-level “death” taxes.
  5. Make significant charitable contributions
    By making a charity the beneficiary of your life insurance, you can make a much larger contribution than if you donated the cash equivalent of the policy’s premiums.
  6. Create a source of savings
    Some types of life insurance create a cash value that, if not paid out as a death benefit, can be borrowed or withdrawn on the owner’s request. Since most people make paying their life insurance policy premiums a high priority, buying a cash-value type
    policy can create a kind of “forced” savings plan. Furthermore, the interest credited is tax deferred (and tax exempt if the money is paid as a death claim).

What is in a Standard Homeowners Insurance Policy?

Written By Charlotte Insurance on November 19, 2010. It has 0 comments.

A standard homeowners insurance policy includes four essential types of coverage. They include:

  1. Coverage for the structure of your home.
  2. Coverage for your personal belongings.
  3. Liability protection.
  4. Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.

1. THE STRUCTURE OF YOUR HOUSE

This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disaster listed in your policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. When
purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home.

Most standard policies also cover structures that are detached from your home such as a garage, tool shed or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home. If you need more coverage,
talk to your insurance agent about purchasing more insurance.

2. YOUR PERSONAL BELONGINGS

Your furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disaster. Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure
of your home. So if you have $100,000 worth of insurance on the structure of your home, you would have between $50,000 to $70,000 worth of coverage for your belongings. The best way to determine if this is enough coverage is to conduct a home inventory.

This part of your policy includes off-premises coverage. This means that your belongings are covered anywhere in the world, unless you have decided against off-premises coverage. Some companies limit the amount to 10% of the amount of insurance you have for
your possessions. You have up to $500 of coverage for unauthorized use of your credit cards.

Expensive items like jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. Generally, you are covered for between $1,000 to $2,000 for all of your jewelry and furs. To insure these items to their full value, purchase
a special personal property endorsement or floater and insure the item for it’s appraised value. Coverage includes “accidental disappearance,” meaning coverage if you simply lose that item. And there is no deductible.

Trees, plants and shrubs are also covered under standard homeowners insurance. Generally you are covered for 5% of the insurance on the house—up to about $500 per item. Perils covered are theft, fire, lightning, explosion, vandalism, riot and even falling aircraft.
They are not covered for damage by wind or disease.

3. LIABILITY PROTECTION

Liability 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 your pets. So, if your son, daughter or dog accidentally ruins your neighbor’s expensive rug, you
are covered. However, if they destroy your rug, you are not covered.

The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit of your policy. You are also covered not just in your home, but anywhere in the world.

Liability limits generally start at about $100,000. However, experts recommend that you purchase at least $300,000 worth of protection. Some people feel more comfortable with even more coverage. You can purchase an umbrella or excess liability policy which
provides broader coverage, including claims against you for libel and slander, as well as higher liability limits. Generally, umbrella policies cost between $200 to $350 for $1 million of additional liability protection.

Your policy also provides no-fault medical coverage. In the event a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company. This way, expenses are paid without a liability claim being filed against you.
You can generally get $1,000 to $5,000 worth of this coverage. It does not, however, pay the medical bills for your family or your pet.

4. ADDITIONAL LIVING EXPENSES

This pays the additional costs of living away from home if you can’t live there due to damage from a fire, storm or other insured disaster. It 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% of the insurance on your house. You can increase this coverage, however, for an additional premium. Some companies sell a policy that provides an unlimited
amount of loss-of-use coverage, but 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.

What is Covered By a Basic Auto Policy?

Written By Charlotte Insurance on November 18, 2010. It has 0 comments.

Your auto policy may include six coverages. Each coverage is priced separately.

1. BODILY INJURY LIABILITY

This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.

It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.

2. MEDICAL PAYMENTS OR PERSONAL INJURY PROTECTION (PIP)

This coverage pays for the treatment of injuries to the driver and passengers of the policyholder’s car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident.
It may also cover funeral costs.

3. PROPERTY DAMAGE LIABILITY

This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else’s property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other
structures your car hit.

4. COLLISION

This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your
deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you’re not at fault, your insurance company may try to recover the amount
they paid you from the other driver’s insurance company. If they are successful, you’ll also be reimbursed for the deductible.

5. COMPREHENSIVE

This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals
such as birds or deer.

Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium.

Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.

6. UNINSURED AND UNDERINSURED MOTORIST COVERAGE

This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.

Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.

Self-storage Units can Provide Useful Extra Space, But Belongings must be Properly Insured

Written By Charlotte Insurance on November 15, 2010. It has 0 comments.

Those who are downsizing to a smaller apartment, moving home to live with parents to save money or simply have too much stuff, may find storage units a useful solution for dealing with extra belongings. While storage units may be the answer to de-cluttering your home, adequate insurance coverage is the answer to protecting items while in storage, according to the Insurance Information Institute (I.I.I.).

If an item is valuable enough to merit paying for storage, it should be financially protected with the proper amount and type of insurance.  Even in the best managed storage
facilities, theft, fire and other disasters can and do occur. That’s why before signing a rental agreement, it is important to find out what types of losses will be covered by the storage facility and whether supplemental insurance may be needed.  Consumers
should also check their home or renters insurance policies to learn how much insurance protection they may already have.

Standard homeowners and renters insurance policies that include off-premises protection provide insurance coverage for property in storage facilities from theft and damage from
fires, tornadoes and other disasters listed in the policy. They will not cover damage from flooding, earthquakes, mold and mildew, vermin or poor maintenance. Some insurers may limit the amount of coverage to 10 percent of the amount of insurance you have
on your overall personal possessions for items stolen or damaged away from home. Other insurers may offer higher limits, so check with your insurance agent or company representative.

Personal possessions can be covered on either an actual cash value or a replacement cost basis. An actual cash value policy would pay only the depreciated value of an item,
while a replacement cost policy would pay to replace the item at what it would cost to purchase it at the time of loss. Replacement cost policies generally cost about 10 percent more but are a better value in the long run.

If you intend to store valuable property such as art, antiques, jewelry, furs or other expensive items, there may be dollar restrictions under your standard policy. Ask your
agent or company representative about adding a floater or endorsement to your policy in order to fully cover these items.

One of the best ways to protect your property and ensure that you are prepared to submit a claim in the event of a loss, is to create a detailed home inventory of all your possessions,
including those in storage. If your property is stolen or damaged, an inventory can help speed the claims process and substantiate your loss. It will also help you determine how much insurance to buy to adequately protect your possessions.

In order make the process of creating a home inventory easier, the I.I.I. has developed free, online software called
Know Your Stuff. The program walks
you through your home room by room and allows you to enter important data such as purchase price, serial numbers, etc. You can also upload photos and scanned receipts and appraisal forms. The data is stored on a secure site where only you can view it—your
inventory is safe and you can access it from any computer, at anytime.

The I.I.I. offers the following tips for choosing a storage company:

  • Make sure the facility is constructed using fire-resistant materials.
  • Find out what security measures are being taken by the storage company. Well run facilities provide electronic gates with coded access, an on-site manager, monitored
    video surveillance, adequate lighting, individual door alarms and personal locks available for purchase.
  • Use a facility that offers climate-controlled space. Climate-controlled units maintain a temperature of 55 to 85 degrees. This feature helps protect stored belongings
    from extreme temperatures as well as mold and mildew.
  • The unit should have roll-up doors that properly close and lock.
  • Check that the roof is in good repair with no sign of interior leaks.
  • Make sure the facility prohibits the storage of hazardous material.