Taking care of yourself is important, but you never know...

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Earthquake Insurance on my home...do I need that?

The way I always answer this question is by sharing the premium cost and a map showing the area affected by the 1895 earthquake.

Just as with any insurance, you hope you never need it but are glad to have it if something happens.  In our area of Western Illinois the premium is usually less than $100 per year.  One thing to keep in mind is that the deductible in the event of a claim is usually a percentage (10% is common) of your property value.  So if you home in insured for $200,000 your earthquake deductible is $20,000.

The choice is always yours...

Auto Recall Email Notice

Did you know that nearly 40% of auto recalls never get repaired.  This could be because the owner moved, bought a pre-owned vehicle, or the notice simply got dismissed as junk mail. 

Check out http://www-odi.nhtsa.dot.gov/subscriptions/index.cfm

This is a government site that allows you to put in the year and make of your car, if there is a recall you get an email.  That simple. They do not send spam or sales pitch emails, only recall notices.

Protecting Your Family’s Future

As a new member of the parent club (member since 11/10/2008), I’ve realized the truth of the common warning, “your life is going to change.”  No one ever said in what way my life would change, but without a doubt, there are so many things that have.  One big change is the new life-long responsibility to provide for my family.  

I have worked for years with young families, helping them prepare for the unexpected.  The importance of that preparation has now taken on an even greater meaning to me. 

Oftentimes, the vast number of decisions for families to make and the many options available can be overwhelming and keeps the families from making those important decisions (paralysis of analysis.)

I find this to be true of families that have not adequately planned for the future with life insurance. They are not intentionally avoiding the preparation; they just don’t know where to begin. Unfortunately, when an unprepared family faces a tragedy, the surviving family members often face tremendous hardships.

When I discuss life insurance with my clients, they are often surprised at how easy the process is and how affordable the solution can be.  Here are a few common questions that many families have and my answers:

Why do I need life insurance?

All of the reasons for having life insurance can be put into two categories: love and debt.  When you love your family, you want to see that they have the best future possible, even if you are not around.  Parents with proper coverage provide their families with enough money to payoff the debt, or at least continue making the monthly payments, buy groceries, pay the bills, and take care of the other necessities of life.  Parents without proper coverage often leave the surviving family members facing foreclosure or other significant financial hardships.

What amount of life insurance coverage is right for me?

It is true that not all families need the same coverage.  When determining the amount that is right for your family, you should consider such factors as: replacement of lost income, loan payoffs, college expenses for children, and final expenses.   A general rule of thumb that is commonly used is to have coverage equal to ten times your annual income, with the idea that the benefit would be invested and the surviving family members would collect the investment earnings to pay for ongoing expenses.  There are also simple calculation forms I can provide if you email me at: bingledue@macombinsurance.com.

What is the difference between term and permanent life insurance?

Permanent insurance comes in many forms but usually combines a death benefit with a savings component.  These policies vary significantly and the premiums are substantially higher than term insurance.  One advantage of permanent life insurance is that when properly funded, they do not expire like term insurance does.

Term insurance is a simple policy where you determine the amount of time you want the coverage and how much coverage you want in the event of death (death benefit).  The most common term policies are 10, 20, or 30 year policies.  If you were to purchase a 20 year term policy and live beyond the 20 years, your coverage expires and there is no refund of premium.  The benefit of this type of policy is that you get a significant amount of coverage at a minimal cost.  This is the most common type of life insurance purchased.

What is Return of Premium Term Life Insurance?

As a way to address outliving term life insurance, some insurance companies have recently created a return of premium term policy.  When the insured lives beyond the selected term, the company will refund the premiums paid over the life of the policy.  This is a good option if you like the pricing of term insurance, but want to collect your premiums back at the end of the policy.  The premiums are greater than a basic term policy, but much less than permanent insurance and allow for a full refund of premium dollars paid.

What is factored into the premiums?

The cost of life insurance is based on many factors, such as age, health, tobacco use, policy type, and other relevant information.  The younger you are when purchasing the coverage, the lower your overall cost will be. 

While these are common questions, you may have your own; therefore, I recommend you contact a trusted insurance professional to discuss your individual circumstances.  Since no one can predict the future, you need to be prepared.  Your family is counting on it.

Beau Ingledue

Published in IParent Magazine Feb/March 2009

Why do I have to carry so much coverage on my property when it is worth much less?

This question is one that is asked frequently by those looking to insure a home they just purchased. There is a distinct difference between market value and replacement value. Market value is what something is worth to a buyer where as replacement cost is the amount it would cost to replace the item at todays prices. When the discussion is about real property, the only way to replace an item is to rebuild it.

Generally if you were to have a loss you would expect the insurance company to replace your home, therefore, you must have enough coverage to do just that. If you do not insure your home for the appropriate amount the insurance company is entitled to reduce the amount of all claims payments proportionate to the amount of the shortage.

As an example, if the replacement cost on a house is $200,000 and the homeowner carries only $100,000 of insurance (50%) then any loss payment can also be reduced by 50%.

If you want the insurance company to pay the full value of a covered loss (less deductible) then you need to be certain to insure the property at the correct amount on a replacement value policy.

Have a question of your own? Feel free to post it below or email it to info@macombinsurance.com

Why doesn't auto insurance get cheaper as a vehicle gets older?

This is a common and understandable question for anyone that has comprehensive and collision coverage on an aging vehicle. The answer is that just because the vehicle is older doesn’t mean it is less expensive to repair. In some cases, it is more expensive to repair since parts may be more difficult to find.

While it is true that if the vehicle were totaled, you would get less than if it were a newer model; however, only a small number of vehicles in accidents are totaled.

Part two of this question would be: how do you decide when to remove comprehensive and collision coverage? The answer to this is subjective. The reason to carry comprehensive and collision is to remove the financial burden of repairing your vehicle if it were damaged. We generally recommend always carrying comprehensive coverage since it covers things like hitting a deer, vandalism and glass breakage.

The time to consider removing collision coverage is when you are comfortable with writing a check to repair or replace your current vehicle in the event of an accident. As a rule of thumb, many choose to do this when the value of the vehicle is less than $3,500.