As a followup to my earlier post about high deductible health plans, I’m curious if you guys have any recommendations when it comes to health savings account (HSA) custodians. My employer has picked one, but their terms aren’t great (too many fees) so I’m thinking of looking elsewhere.

As I noted previously, you’re free to use whoever you want as an HSA custodian. The only downside is that I won’t be able to have the contributions withheld from pre-tax dollars if I don’t use my employer’s preferred HSA custodian. Instead, I’ll have to wait until the end of the yeat to deduct our contributions.

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‘Tis the season… For open enrollment. This year, my employer is really pushing the high deductible health plan, so I spent the weekend poring over the plan documents. Today I thought I’d share what I learned.

Lower premiums

The primary draw of the high deductible health plan are the low premiums. In 2010, the regular PPO plan that we’re accustomed to will cost in the neighborhood of $440/month for our family. In contrast, the high deductible plan will run roughly $70/month.

In other words, if we opt for the high deductible plan, we’ll save $370/month in premiums. That’s a total savings of $4440 per year. Not too shabby. But at what cost?

Higher deductible

It should come as no surprise that a high deductible health plan has a relatively high deductible. In our case, the family deductible would be $3000 ($1500 for individuals). The PPO, on the other hand, has a $900 family deductible ($300 for individuals).

Coverage comparison

Aside from the difference in deductible, the coverage of the two plans is quite comparable. Both plans use the same network, so we’d have access to the same collection of physicians either way.

For “everyday” doctor visits, the PPO has a $20 copay for regular office visits. With the high deductible plan, our insurance would cover 90% of the network rate, subject to our deductible. Beyond that, the coverage is virtually identical, though the high deductible plan has a higher “stop loss” limit ($6000 vs. $2000 for family coverage).

As I noted above, both plans utilize the same network of doctors, and both entitle us to the same reduced rates that have been negotiated by the insurer. Thus, the primary difference really does appear to be

In terms of pharmaceuticals, the coverage would be similar. Instead of calling for a $10 (generic) or $25 (name brand) copay, the high deductible plan would cover 90% of the cost of our prescriptions, again subject to our deductible.

Health savings account (HSA)

If we opt for the high deductible plan, we’ll be eligible for a health savings account (HSA). Like the FSA, the HSA provides provides a tax break on qualified medical expenses.

Not to be confused with a flexible spending account (FSA), however, the HSA has higher limits ($6150 for a family in 2010) and is not subject to the “use it or lost it” provision.

Another key difference is that we’ll be able to invest the funds in the HSA in much the same way we can invest the money in our IRAs. My employer has selected an HSA custodian, but we’re actually free to use anyone we want.

If we choose to go with a different provider our contributions won’t be made with pre-tax dollars, but we’ll still be able to deduct them at the end of the year, and we’ll still be able to make tax-free withdrawals to cover qualified expenses.

One final bit of information is that my employer is offering a one time “seed” contribution to jumpstart our HSA. This amount will count against our annual contribution limit, but it’s free money.

Making a choice

After reading through all of the paperwork, it seems like we’d be fools not to take the high deductible plan. After all, we’d realize an immediate savings of $370/month or $4440/year. Even after paying the deductible, we’ll be $1440 ahead (not counting the HSA seed money).

It’s also worth noting that the physician and pharmaceutical copays are actually a good bit higher than 10% in most cases (e.g., the $20/visit copay is more like 20-25% of the negotiated rate). Thus, once we’ve met our deductible, we’ll actually be catching a bit of a break on these costs.

As of right now, it looks like we’ll be going with the high deductible plan. Assuming we move ahead with this, my intention is to max out the HSA and start building up a stockpile of cash for medical expenses.

Since the HSA isn’t tied to my employer, and we can also carry the money forward and invest it as we see fit, there’s really no downside to overshooting our current needs.

What am I missing?

Okay, here’s where you come in… This high deductible plan almost sounds too good to be true. What am I missing? Do you have a high deductible plan? Why or why not? And if you do have a high deductible plan, have you run into any nasty surprises?

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Do you have a Flexible Spending Account (FSA)? We do, and we love it. Every year, my employer lets us set aside up to $5k in pre-tax dollars to pay for healthcare expenses that aren’t covered by insurance. This includes co-pays, deductibles, prescriptions, orthodontia, vision care, etc.

Well… The Senate Finance Committee has just approved healthcare legislation that would dramatically reduce the value of this perk. More specifically, they’re talking about instituting a $2500 annual cap on FSA contributions that would not be indexed to inflation. As things currently stand, FSA contribution limits are determined by individual employers.

What do you think?

Is this a big deal, or much ado about nothing? My view is that, while standardizing the contribution limits across employers isn’t all that egregious, $2500 is on the low side, and I hate it when Congress fails to index these sorts of things to inflation.

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I’ve written in the past about how to save money on health insurance, life insurance, and car insurance. Today I’m going to round things out with an article on homeowners insurance. What follows is a list of eight tips for reducing your premiums and saving a ton of money.

Focus on your rebuilding costs

While you need to insure your home and its contents against destruction, there’s usually no need to insure the land that it’s built on. Thus, it’s important to think of your actual rebuilding costs (as well as the cost to replace your stuff) when buying a policy. If you don’t, you might end up over-insuring and paying too much.

Increase your deductible

As with other types of insurance, if you’re willing to bear a greater portion of the risk, you can save a significant amount of money. Simply call your agent and ask them to increase your deductible. Just be sure that your emergency fund is large enough to cover your out-of-pocket expenses in the event of a disaster.

Upgrade your security

Things like deadbolt locks, burglar alarms, fire extinguishers, and smoke detectors can earn you a discount. In some cases, these discounts can offset most (if not all) of the additional costs, so it’s well worth checking with your insurer for details.

Bundle multiple policy types together

We get a nice “multi-line” discount for carrying multiple policies with a single company. We actually have two car policies, our homeowners policy, a personal articles policy (for my wife’s engagement and wedding rings) and an umbrella policy all with the same company.

Location, location, location

This one is tough to implement if you already own your home, but… Proximity to fire hydrants, fire stations, etc. can influence your premiums. Not surprisingly, closer is better. No, it doesn’t make sense to move to reduce your premiums, but it might be worth keeping in mind when buying a new home.

Keep your credit report clean

I’ve talked about this one previously… Like it or not, your credit report can influence your insurance rates. Indeed, insurance companies consider clean credit to be an indicator of reduced risk. Thus, it’s important that you check your credit report regularly, and fix any errors that you find.

Ask about other discounts

You can often get a group discount (e.g., alumni association, senior discount, etc.) just for the asking. Give your agent a call today and find out if there are any discounts they can apply to reduce your premiums. If you don’t currently qualify, perhaps there is a group that you can join to get an additional discount.

Shop around

Assuming that you’re doing everything else right, another great way to save money on homeowners insurance is to comparison shop. You can either call around to local agents, or check a homeowners insurance comparison website. Whatever you do, be sure to buy from a reputable company so you won’t run into any problems if/when you file a claim.

So there you have it… Eight simple tips for saving money on homeowners insurances. If you have any further suggestions, please be sure to share them in the comments.

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We’ve been busy shopping around for home insurance for the condo that we’re buying. I’ve contacted several agents by phone and e-mail looking for a good deal. I’ve successfully reduced our car insurance bill by half simply by checking with different companies, so I know this will be worth the effort.

Why do you need homeowner’s insurance for a condo?

Homeowner’s insurance provides protection in the event of a loss such as a fire or burglary. You are most likely required to have it if you’re carrying a mortgage, as your lender will want the property protected.

Even if your lender recommends a company, you’re free to shop around as long as you meet their minimum requirements for insurance coverage. In addition to property protection, you’ll also get some level of liability protection that covers claims from people injured while on your property.

Your cost will vary based on the amount of coverage you sign up for and the amount of your deductible. We decided to look at a $500 deductible for now, which means we’re responsible for the first $500 of any claim.

What special about homeowner’s insurance for a condo?

I found out quickly that condo insurance is cheaper than home insurance. This is because your homeowner’s association will pay for the common areas in case of damage. Any additional coverage depends on the home association rules. To be honest, I found it difficult to quickly scan and find the answer in our HOA manual, so I called them instead.

While some associations do pay for the exterior of the structure, ours only pays for the common areas. MSN ran a story about condominium insurance and an insurance agent explaining how structural coverage can vary depending on your HOA’s “master” policy:

• Bare walls in. These policies cover all real property from the exterior framing inward but do not cover fixtures or installations within a condo unit. Features such as counter tops, bathroom and kitchen fixtures, and flooring are not covered. If your condo association has this kind of master policy, you’ll probably have a greater need for individual coverage…
• All in. These policies cover fixtures, installations or additions within the interior surfaces of the perimeter walls, floors and ceilings of individual units. Condo owners under an all-in plan will probably have a more limited need for individual coverage…

Check with your HOA to get an idea of what type of coverage you need.

Contact Information for Insurance Companies

Bankrate offers an online insurance quote form on its site. While it asks you some questions on discounts and coverage, you might want to call some companies directly to speak with an agent.

• Liberty Mutual: 1-800-837-5254
• Nationwide: 1-877-669-6877
• Ameriprise: 1-888-239-9953 (Costco Members get a discount)
• State Farm: The company encourages you to find a local agent to get a quote.
• Farmer’s Insurance: 1-800-FARMERS
• Allstate: 1-866-726-2814
• Geico: 1-800-841-2964
• Progressive: 1-800-PROGRESSIVE

When calling or e-mailing for a quote, be prepared to ask for discounts. Some things that may lower your premiums include:

• Smoke detectors
• Alarm system
• Distance to the nearest fire station (closer = better)
• Distance to nearest fire hydrant
• Fire extinguishers (believe it or not, we got one as a gift!)

Also check to see if you can qualify for an alumni discount, as Pinyo from Moolanomy receives one from his insurance company.Finally, if you have other policies with the same carrier (such as car insurance), check on the availability of a multi-policy discount (via CentsibleLife).

Your take

Who do you have insurance with? Are you happy with your coverage, rates, and/or service? What discounts have you received on your home insurance? Do you have any other tips?

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My husband and I have recently been reviewing our insurance coverage to figure out exactly we need as a married couple with no kids. Last week, I shared some thoughts on health and life insurance.

One of the most frequent responses to my previous post was that we should also be thinking about disability insurance. Nobody likes to think about what life would look like should disability strike. According to the American Council of Life Insurers, however, the reality is that one-third of all Americans between the ages 35 and 65 will experience a disability lasting more than 90 days.

What is disability insurance?

Disability insurance replaces a portion of your income if you become disabled and are unable to work. While employer-backed plans are often more affordable, you tend to have more options buying private coverage. Because every policy is different, it’s important to familiarize yourself with the benefits offered by each.

For example, if you receive bonuses and commissions in addition to salary, double-check to see if your coverage is based on your base salary alone. Also make sure you know when your coverage kicks in, what percentage of your income it pays, and so on.

Short-term vs. long-term disability insurance

As you might imagine, the primary difference between short- and long-term disability insurance lies in the types of disabilities that they cover, and the length of time that they pay benefits.

Short-term disability insurance usually kicks in quickly, but only lasts for a few months. The idea is that this is a temporary condition, so benefits will end after a certain time period disclosed in the policy.

Long-term disability typically has a longer waiting period before going into effect, but also provides longer-term coverage. Thus, long-term disability insurance protects you if you suffer a devastating disability and have to stop working for an extended period of time.

What about Worker’s Compensation?

It should be noted that worker’s compensation is also a form of disability insurance, but it does not cover injuries outside of the workplace. Moreover, it doesn’t cover disabilities caused by illness. Thus, if you’re relying on worker’s compensation to provide your safety net, you’re taking a significant risk.

What about Social Security?

While the Social Security Administration offers disability benefits for you and your family, they don’t kick in for six months, and they’re not particularly generous. For example, if you are currently 30 years old, earning $60,000 per year, and intend to retire at age 65, this calculator estimates that you’d qualify for $1860/month in benefits — that’s just a bit over $22k/year.

How much disability insurance should you get?

For your disability insurance needs, I suggest using a calculator, like this one, which can give you an objective idea of what you need. In essence, you need to figure out how much you need to cover your bills while you’re out of work. If there’s a gap between your coverage and your expenses, you’ll have to make up the difference with your savings.

Gene Meyer from Kitchentablenomics had this to say:

Look for something that covers your ability to work your own occupation (Social Security provides what’s known as “any occupation” coverage) and covers as close to 70% of your income as you can afford. (70% is the max that many carriers insure.) You will owe income taxes on any benefits you get from a policy that your employer buys, but not on anything you buy personally.

Since disability policies don’t typically replace your full salary, and they also don’t kick in right away, it’s still critical to have an emergency fund to supplement your coverage.

In the end, you have to weigh all the factors for your family. How much coverage can you comfortably afford?

Your thoughts?

My husband and I are looking at our disability insurance options, but probably won’t make a decision until the next month or so. How about you? What sort of disability coverage do you have? Employer-provided coverage? Or do you have a private policy?

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My husband and I have recently been reviewing our insurance coverage to figure out exactly we need as a married couple with no kids. We want to have enough coverage to handle personal disasters without draining our finances, but we don’t want to waste money on unnecessary coverage. Our two biggest needs are health insurance and life insurance, so that’s what I’ll be talking about here.

Health insurance

Skimping on health insurance can place you in a financially precarious position. My friend’s father gambled by not carrying a health insurance policy, and he’s still paying for it years later. He thought that he could save some money since he was generally healthy, but that decision wound up costing him much more than he would’ve paid in premiums.

He’s been fortunate enough to to retain ownership of both his business and home through this ordeal, but others aren’t so lucky… Did you know that medical bills are the #1 cause of bankruptcy?

Finding affordable health insurance

If you’re currently working, you may already have health insurance through your employer. If not, check with Human Resources to see if you qualify for coverage. In some cases, you have to work for a minimum amount of time (e.g., 90 days) before you’re eligible. Employer coverage is great because the premiums are often lower than what you can get on your own.

If you’re currently temping, you may be able to get health insurance through the temp agency. For example, when we first moved to North Carolina, my husband used the temp agency’s health insurance and I used my job’s insurance to keep us both covered with minimal out-of-pocket expense.

If you don’t qualify or your job doesn’t offer health insurance, you’ll have to look for private health insurance. You can get a good sense for the prevailing prices by looking at sites like InsureMe or eHealthInsurance.

If you can’t afford comprehensive coverage, you should consider looking into catastrophic coverage (sometimes referred to as “major medical” coverage). These policies have lower premiums, but only cover catastrophic illnesses or injuries.

I searched online for a catastrophic insurance policy and found a few in the $65-$80/month range. As with everything, carefully compare health insurance policies before signing up.

See also:
» How to Save Money on Health Insurance

Life insurance

The main purpose of life insurance is to fulfill your financial obligations after you die. Beyond deciding if you whole or term life insurance, you also have to decide how much life insurance you need.

Finding affordable life insurance

My husband currently has a small life insurance policy through his job, but we’ve been looking at increasing our coverage. We ultimately decided that a low-cost term life insurance policy is the best for our needs.

Since everyone’s needs are different, you should give careful thought to how much insurance you need. While there are some handy rules of thumb out there for “sizing” your life insurance policies, nothing beats running the numbers yourself. Here are some key questions to consider when determining your life insurance needs:

• How much money will you need for your funeral?
• How much support will your dependents need?
• How long will they need this level of support?
• Do you have any one-time obligations, such as a mortgage payoff?

Buying a term life insurance policy when young and healthy typically results in low premiums. Being in generally good health and avoiding risky behaviors such as smoke also helps keep your rates down.

Once again, online insurance comparison sites such as InsureMe can be a great way to get a handle on the prevailing rates. In our case, we found that a $100k, 30 year term life insurance policy would cost around $251 a year. Of course, this will vary based on age and health.

See also:
» How Much Life Insurance do you Need?
» How to Save Money on Life Insurance

Your thoughts

What sort of coverage do you have? Group health insurance? Or do you have a private policy? What about life insurance? What sort and how much?

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This morning I wrote about the high cost of hurricane insurance. Since today is the first day of hurricane season, I thought I’d follow that up with a list of tips from the National Hurricane Center on preparing for and surviving a hurricane.

While some of these tips are hurricane specific, others make good sense in the face of just about any natural disaster.

• Take steps to protect your home against unnecessary damage.
• Talk to your family about the types of hazards you might face.
• Identify a safe room, or at least the safest areas in your home for each hurricane hazard. If there is no suitable location in your home, you might need to rely on a community shelter.
• Determine the best escape routes from your home as well as safe places for you and your family to meet.
• Identify an out-of-state family member or friend to serve as a single point of contact for your family.
• Develop a plan for what to do with your pets if the event of an evacuation.
• Post all applicable emergency numbers near your phone and make sure your kids know how/when to call 911.
• Double-check your insurance coverage to ensure that hurricane damage is covered, and that you also have flood insurance (if necessary).
• Stock up on non-perishable supplies and create a disaster supply kit.
• Get a weather radio and be sure to replace its battery every 6 months (along with your smoke detector batteries) to keep them fresh.
• Take First Aid, CPR, and disaster preparedness classes.

You might also want to check out Matt’s list of tips for preparing for a power outage, as you’re likely to be in the dark for at least awhile after the storm passes. If you have any tips of your own, please share them in the comments.

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The 2009 hurricane season officially starts today. As such, I thought I’d talk a bit about hurricane insurance. Unfortunately, according to recent reports, hurricane insurance rates are on the rise. Beyond increased premiums, issuers have been increasing deductibles and, in some cases, dropping policy holders in high risk areas.

These changes have been driven by a combination of higher than expected hurricane-related claims as well as increased costs related to reinsurance (i.e., insurance sold to other insurers to mitigate the risk of losses). Beyond this, the recent economic turmoil has put additional strain on insurance companies, resulting in pressure to increase premiums.

The good news (for us) is that we’re not really in hurricane country. The bad news is that many of you are, and thus might be in need of additional protection.

Do you need hurricane insurance?

In many cases, the damage caused by hurricanes will be covered by your basic homeowner’s insurance policy. That being said, an increasing number of policies actually exclude hurricane-related damage, in which case you’ll need to buy additional coverage. Do yourself a favor and check your policy now instead of waiting until it’s too late.

Note that, even if you do have coverage, you’ll still need to keep a decent amount of cash on hand to protect yourself. The reason for this is that the deductible for hurricane-related damage is typically a percentage of your home’s value, and can be quite high in some cases.

What about flood insurance?

Another extremely important point is that hurricane coverage is generally limited to wind damage, and thus does not cover damage due to a possible storm surge or subsequent flooding. As such, you’ll need to purchase flood insurance if you wish to be fully protected.

Something else to consider here is that, while most flood policies cover the costs associated with repairing/replacing the structure of your home and your possessions, they do not cover alternate living arrangements if you’re forced out of your home during the repairs. If this might be an issue for you, you’ll either need additional coverage, or you’ll need to beef up that emergency fund.

Other considerations

Finally, given the potential for water intrusion during and after a hurricane, you should check to see if you’re covered for mold damage. Mold can be an extremely expensive problem to deal with, and many homeowner’s insurance policies explicitly exclude mold damage, or at least limit the coverage associated with mold claims.

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In writing about how to save money on life insurance, I mentioned that you shouldn’t buy too much coverage. After all, if you buy more insurance than you need, you’re just throwing money away. But that begs the question…

How much life insurance do you need?

Unfortunately, there are no easy answers. In fact, my wife and I have bought and re-bought new life insurance policies several times in the past 5-10 years as we tried to get it right. The real challenge for us has been that the “right” answer has been a bit of a moving target. As our income has increased and our responsibilities have grown, we’ve outgrown our coverage.

Given our past experiences, I thought I take some time to share what we’ve learned. Note that I’m talking specifically about term life insurance policies here, as I’m a proponent of the view that you should keep your insurance and investment needs separate — in other words, buy term and invest the difference!

Do you even need life insurance?

Depending on where you’re at in life, it’s possible that you don’t need life insurance at all. For example, if you’re single and have no dependents, you might be able to get away without buying a policy (though it might be a good idea to have enough to cover your funeral expenses). But if others depend on you for your income, then you’ll likely want at least enough coverage to replace your earning potential, at least temporarily.

Life insurance rules of thumb

If you poke around online, you’ll find a number of websites that claim that the ‘best’ approach to determining your life insurance needs is to simply buy a policy that corresponds to a certain multiple of you annual salary. The problem here is determining the correct multiple.

Should you buy a policy for 8x your annual salary? 10x? Why not 12-15x? In the end, this really boils down to what you want your life insurance to do for your. If you’d want your life insurance policy to provide support for your family for an extended period, you’ll obviously need more. If you’re comfortable with your insurance policy being a short-term stopgap, you can get away with less.

An alternative approach to buying an arbitrary multiple of your salary would be to use an online life insurance calculator. In this case, you enter data on anticipated one-time expenses, ongoing living expenses, timeframe, etc. and the calculator will spit out an answer.

Don’t forget employer-provided coverage

Another factor to consider when determining how much life insurance to buy is whether or not (and how much) coverage you have from work. In many cases, As valuable as this sort of coverage can be, it’s important to not become too dependent on it. After all, if you lose your job, you’ll likewise lose your life insurance coverage.

What about a non-working spouse?

Another important thing to consider is whether or not you have a non-working spouse. On the one hand, you’ll have to decide whether or not to purchase coverage for them (we did, more below). On the other hand, you also have to worry about your spouse incurring expenses that aren’t directly reflected in you salary.

Perhaps the most troublesome point in this context is health insurance. In our case, we have great health insurance coverage. Unfortunately, it’s tied to my job. Since my wife stays home with the kids, and since we’d want her to continue doing so at least for awhile, we need to plan for private health insurance.

Other factors to consider

Are you relatively early in your career path? Do you plan on expanding your family? Do you anticipate any other major changes in the future? If so, then it’s likely that your life insurance needs will change (perhaps dramatically) in the years ahead.

There are two main ways for dealing with these sorts of things. One is to try and project your needs and size your life insurance policy accordingly. The other is to buy the right policy for today, and then simply replace it at some point in the future.

Both of these approaches have their downsides. Overbuying now means that you’ll spend more than necessary in the short term. However, if you wait to buy more coverage, you run the risk that you’ll fall ill in the interim, and your rates will increase dramatically.

How we approached it

In the end, determining your life insurance needs is a very personal matter, and broad rules of thumb are unlikely to provide you with the right answer. This last time around, my wife and I sat down and outlined exactly what it is that we want from our life insurance policies if something happened to one of us.

In short, we’d both want for our family’s lifestyle to change as little as possible. We have four young kids, and my wife stays home with them during the day. If she were to pass away, we’d need to replace her efforts at home with someone to watch the kids while I’m at work, help around the house, etc. Thus, even though she doesn’t generate any outside income, we need for her to be insured.

Likewise, if I were to die, we wouldn’t want for her to suddenly have to go back to work. Thus, we’d need to completely replace my income for the foreseeable future. We’d also need for the payout to be large enough to cover new expenses like private health insurance since our health insurance is currently tied to my job.

How much life insurance do we have?

In the end, we bought a pair of twenty year term life insurance policies to cover us. We selected twenty years because that roughly corresponds to the time at which our kids will be out of the house and completely on their own. At that point, our day-to-day responsibilities, as well as our need for life insurance coverage, will drop off dramatically.

In terms of amounts, my policy is worth roughly 20x the income from my day job. That might sound like a lot, but I also make a decent amount of self-employment income, so it’s a much smaller multiple of my total annual income. On top of this, I also have a limited amount of coverage — 3x my annual salary — through my day job. The nice thing about the employer coverage is that it rises with my salary, such that our total coverage will grow slightly over time.

In my wife’s case, we bought a smaller policy, corresponding to roughly one-third of my coverage. As noted above, it’s important for us to have coverage for her, as we’d want to maintain a very similar way of life for our family even if one of us were out of the picture. Thus, we’d need to hire someone to help with the kids, help keep the house in order, etc. However, since my wife doesn’t currently generate any outside income, we can get away with less coverage for her.

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Related Articles at fivecentnickel.com:

» Insurance Needs for a Couple with No Kids
» Buying Term Life Insurance (Again), Update #4
» Buying Term Life Insurance, Part V (Epilogue)
» Buying Life Insurance (Again), Update #3
» Buying Term Life Insurance, Part II
» Buying Life Insurance (Again), Update #1
» Buying Term Life Insurance, Part IV
» One Year Ago This Week (August 27th – September 2nd)

As a followup to my earlier articles on how to save money on health insurance and life insurance, I thought I’d tackle car insurance. What follows is a list of six tips for reducing your premiums and saving a ton of money.

Keep your driving record clean

In other words, don’t get nailed for speeding like I did a few months back. I was fortunate in that it was a first offense, and I was able to keep my record clean by pleading nolo contendre (no contest) and paying the fine, but… Next time I won’t be so lucky, as I’ll wind up with points on my license and higher insurance premiums.

Increase your deductible

If you’re willing to bear a greater portion of the risk, you can save a significant amount of money. Simply call your agent and ask them to increase your deductible. Just be sure that you have enough cash on hand to cover your out-of-pocket expenses in the event of an accident.

Drop unnecessary coverage

If you’re driving an older car, you might want to consider dropping your comprehensive and/or collision coverage entirely. After all, what’s the sense in paying a ton of money to insure against damage to a car that might not be worth repairing? Note that I’m not suggesting that you drop your insurance coverage entirely, just the portion that pays for repairs on your own car.

Bundle multiple policy types together

I can’t speak for all insurance companies, but we get a nice “multi-line” discount for carrying multiple policies with a single company. We actually have two car policies, our homeowner’s policy, a personal articles policy (for my wife’s engagement and wedding rings) and an umbrella policy all with the same company.

Ask about other discounts

You might qualify for discounts for being accident-free, renewing your policy, driving relatively few miles each year, taking a defensive driving course, etc. Be sure to talk to your agent and get what you have coming to you.

Shop around

Assuming that you’re doing everything else right, another great way to save money on car insurance is to comparison shop. You can either call around to local agents, or check an auto insurance comparison website. Whatever you do, be sure to buy from a reputable company so you won’t run into any problems if/when you file a claim.

So there you have it… Six simple tips for saving money on car insurance. If you have any further suggestions, please be sure share them in the comments.

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» Save on Medical Care – Part II
» Buying Term Life Insurance (Again), Update #4
» Save Money on Life Insurance by Paying Annually

Life insurance is an incredibly important financial product. Unfortunately, it’s also relatively costly. With that in mind, I thought I’d put together some tips for saving money when you’re in the market for a life insurance policy.

Get healthy

Any insurer worth their salt will require a physical as part of the underwriting process. The good news is that it’s easy — they’ll send someone out to your home or office. Smoking, obesity, high blood pressure, etc. will all result in significantly higher premiums. So… Leading a generally healthy lifestyle will save you a lot of money on your life insurance premiums.

Buy it only if you need it

Life insurance makes the most sense for people with significant financial responsibilities. If others depend on you for financial support, then you most likely need it. However, if you’re young, unmarried, and childless, you may be able to skip it and bank the savings.

Buy term and invest the difference

The simplest and cheapest form of life insurance is a term policy. While insurance policies with a cash value, such as whole life or universal life, can make sense in certain circumstances, you can save a good bit of money by foregoing the investment component, buying a term policy, and investing your savings on your own.

Don’t buy more than you need

The more coverage you buy, the more it will cost. You don’t want to go cheap and leave your loved ones high and dry, but it also doesn’t make sense to buy more than you really need. Just don’t forget to factor in the effects of inflation.

Pay attention to your payment terms

Most insurers allow you to pay monthly, quarterly, semi-annually, or annually. While paying monthly might sound better than coughing up a year’s worth of premiums in advance, keep in mind that many companies charge for the privilege.

Shop around

The premiums on identical policies from different issuers can vary widely. Thus, it pays to shop around. Either enlist the help of a reputable insurance agent or do what we did — poke around on a life insurance comparison website. Just don’t buy from a company on the brink of bankruptcy in the interest of saving a few bucks.

So there you have it… Six simple tips for saving money on life insurance. If you have any further suggestions, please be sure share them in the comments.

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» Buying Term Life Insurance, Part V (Epilogue)
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» Buying Life Insurance (Again), Update #1
» Buying Term Life Insurance, Part IV
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Having health insurance helps protect your family from medical problems, and can also help you avoid huge medical bills. Unfortunately, an estimated 47 million Americans are uninsured. A major contributor to this statistic is the high cost of health insurance premiums. The good news is that there are a few things you can do to reduce your health insurance premiums and associated healthcare expenses.

Increase your health insurance deductible

This isn’t possible with all plans, but a higher deductible can save you hundreds and monthly premiums. Just be sure that your emergency fund or health savings account (HSA) can cover the deductible.

Go for generic drugs whenever possible

Some drugs are available in generic form at less than half the cost of the name brand version. On top of this, many major retailers (e.g., Wal-Mart, Costco, Target, and Walgreens) offer $4 prescriptions, and some even offer free antibiotics.

Try health clinics

I’ve found this to be a great option for some of my exams, and it can also help save on prescriptions. With my previous health insurance, my co-pay was $30/month for one of my prescriptions. By going to the university health clinic, I pay $40 for three month supply. I save $240/year just by doing that. Check with your local health department to see if there are any such clinics in your area.

Look into private health insurance

Employers don’t always offer the best deal on health insurance. Shop around online and see if there a policy that is more affordable for you. You may also qualify for some state run health insurance programs, which can likewise reduce the costs.

So there you have it… Four tips for saving money on health insurance and medical care. While many people are trying to cut costs and save money, that doesn’t have to involve sacrificing the quality of your healthcare. Do you have any additional tips for reducing your health insurance premiums or otherwise saving money on healthcare?

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Did you know that a layoff could jeopardize the funds in your flexible spending account (FSA)? In most cases, when an employee is let go, they are claim reimbursement for qualified medical expenses that are incurred while they’re still covered by their employer’s benefits plan. But once that expires, you may be out of luck.

Given that benefits coverage often ends at the end of the month during which the layoff occurs, you might have to act quickly. Alternatively, you may be able to extend your health coverage under the Consolidated Omnibus Reconciliation Act of 1985 (commonly referred to as COBRA coverage) which should extend your FSA eligibility.

On the flip side, you’re allowed to spend money out of your FSA faster than you put it in. Thus, you may have a negative balance in your FSA upon termination. While it’s possible that your (former) employer will ask for reimbursement of the overage, we’ve discussed this here before, and it’s not clear that you have to comply.

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I’m in the midst of what may be the world’s longest search for long term disability (LTD) insurance. I’ve been thinking about this for months and, though I have coverage through work, I made picking up a individual LTD policy one of my goals for 2008. Unfortunately, I’ve made virtually no progress on this.

Over the weekend I started digging around for information again, and I ran across a nice compilation of tips courtesy of the Federal Citizen Information Center — you know, the good folks in Pueblo, CO.

Here goes…

Examine how the policy defines disability. Some policies only pay if you can’t work in any occupation, whereas others pay if you can’t work in your own occupation. The latter is obviously better.

Ask for outlines of coverage so you can compare across policies. Compare the definition of disability (above), benefit amount, length of waiting period, length of benefit period, benefits for partial disability, cost-of-living adjustments, etc.

Check that the company and agent are licensed in your state. If you’re unsure, contact your state’s insurance department.

Look for a company that is reputable and financially strong. Ratings agencies include:

» A.M. Best Company
» Standard & Poor’s Insurance Rating Services
» Duff & Phelps, Inc.
» Moody’s Investor Services

Fill out your application accurately. Don’t withhold information or lie about your health. The insurer might refuse to honor your policy if you’re dishonest or provide incomplete information.

Read your policy carefully. Once you know what you want/need, it’s important to make sure that the policy that you’re considering offers the sort of coverage that you’re looking for.

Shop around and compare costs. LTD insurance is typically sold individually through insurance agents, or through group policies which may be available from your employer or professional organizations. Costs and coverage levels vary.

Finally, when you decide to purchase a policy, make your check payable to the insurance company and get proof of payment. Also be sure to check the date that the insurance becomes effective.

In addition to these tips, you might be interested in the CIC’s handy LTD insurance checklist.

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Related Articles at fivecentnickel.com:

» Do You Need Disability Insurance?
» Thoughts on Long Term Disability Insurance
» Open Enrollment and our Flexible Spending Account
» Ten Simple Ways to Cover Your Ass(ets)
» Buying Term Life Insurance
» Buying Life Insurance (Again), Update #3
» Buying Term Life Insurance, Part II
» Buying Term Life Insurance, Part IV

Do you have a home inventory? If you’re anything like us, you don’t. While we used to have a video inventory, it’s woefully out of date — and to be perfectly honest, I’m not even sure where it is. Obviously, this means that it would be pretty difficult for us to put together (and substantiate) an accurate claim if something bad were to happen to our home.

Since creating an inventory of everything that you own can be a daunting task, I thought I’d point out a free software tool designed to make the job easier… The Insurance Information Institute has put together a freely downloadable home inventory software package called “Know Your Stuff.”

While I haven’t ever used it, it looks pretty nice. You start by naming all the rooms in your house, and then you add items to your inventory on a room-by-room basis. You can even add photos of your stuff and scans of your receipts. And best of all, it’s available in both Mac and PC versions.

Once you’ve pulled it together, you can print out a copy for safe storage, or stick one on a flash drive that you stash somewhere off site. You might also consider e-mailing it to yourself and leaving it on the server for safe-keeping.

If you’ve been thinking of putting together an inventory, then maybe this will be enough to nudge you into action. Honestly, as hard as creating the initial inventory seems, the hardest part will likely be maintaining your inventory as you make new purchases or get rid of old things. But even having a semi-updated inventory is far better than having nothing at all.

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I’ve always subscribed to the notion that you should insure that which you cannot afford. Thus, we’ve been very good about doing things like keeping our life insurance coverage up to date and otherwise protecting our assets. Recently, however, I’ve been thinking more and more about long term disability (LTD) insurance as I’m concerned that we don’t have enough.

First, a bit of backstory… We have four young children, and my wife stays at home with them. Thus, I’m currently the sole source of financial support for our family. I have decent LTD coverage through work, but it really wouldn’t be enough to comfortably support us if I were disabled for a long period of time…

There’s a 60 day waiting, at which point the LTD coverage kicks in and replaces up to 60% of my salary. So if I’m not eligible for Social Security disability payments, the insurance will pay 60% of my income. But if I am eligible for other benefits, the insurance will top us off to provide a total of 60% income replacement.

The good thing about about this coverage is that it’s cheap, and it’s a good start. The bad thing is that it, like I said above, I’m the sole source of financial support for our family, and this coverage would leave us well short of a comfortable lifestyle if I were out of commission for an extended period of time. Moreover, it only applies to my “regular” income, and thus wouldn’t help make up the additional shortfall if my self-employment were adversely impacted.

So… I’m in the market for a supplemental LTD policy. Unfortunately, I know very little about what to look for, how much I can expect to pay, etc. Thus, this will be a major learning experience for me.

One interesting tidbit that I’ve run across thus far is that, because my employer-provided LTD is paid out of pre-tax dollars, the LTD income replacement will be taxable (further diminishing the value of 60% income replacement). In contrast, private policies are paid out of your pocket (with post-tax dollars) and the benefits are typically tax free.

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Related Articles at fivecentnickel.com:

» Do You Need Disability Insurance?
» Tips for Buying a Long Term Disability (LTD) Insurance Policy
» Ten Simple Ways to Cover Your Ass(ets)
» Open Enrollment and our Flexible Spending Account
» 2008 Resolutions: Are You Still on Track With Your Goals?
» Buying Term Life Insurance, Part II
» Buying Term Life Insurance, Part IV
» Buying Term Life Insurance, Part V (Epilogue)

It’s that time of year again… Time for benefits open enrollment…

I was just looking through our options, and it appears that we’ll be sitting tight with our current options this year. The biggest change is that we’ll be paying 14.5% more for health insurance this year (and so will my employer). The good news is that our dental coverage will cost the same, and my group life insurance is going down slightly.

Also note that employee retirement contribution limits are staying the same this year, so there won’t be any big changes in that area.

The only thing that we actually have to do is to set up our flexible spending account (which has to be done every year). In 2007, we set aside $1,200 and have essentially maxed that out. In truth, we’re well beyond this amount, but I’ve been lazy about submitting receipts. I haven’t yet decided how much to set aside for 2008. Since we’re not expecting any overly-large expenditures in terms of health care (no more braces until at least 2009), I’ll probably opt for the same amount this year.

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Have you ever heard of “Longevity Insurance?” In short, longevity insurance is a relative new form of insurance that provides you with a guaranteed stream of income later in life, typically starting after you turn 85. To get longevity insurance, you have to make a substantial upfront payment 20 or so years earlier.

Longevity insurance is really just a re-packaged, deferred annuity that’s targeted for retirement-age individuals who are concerned about whether or not they’ll outlive their savings. Because you typically give up any sort of death benefit or early withdrawal options with longevity insurance, however, the monthly benefit can be substantially better than a typical fixed annuity. However, unlike a typical deferred annuity (which offers a guaranteed minimum payout with the potential of receiving more depending on the performance of the stock and/or bond market), longevity insurance locks you in at a pre-determined rate no matter how well the stock and/or bond markets perform. This is really a good news, bad news situation in that you’ll receive a predictable benefit, but you’ll have to give up any sort of flexibility.

The biggest downside? As with any insurance, you run the risk that you’ll end up paying for something that you’ll never need. Given the current life expectancies of 65 year old men and women (they’re the target audience for longevity insurance), it’s questionable whether or not you’ll live long enough to see even a single check. In fact, if you don’t live well into your 90s, you’re not going to get your money’s worth. As with any annuity-based product, cost is also a concern – be sure to run the numbers and make sure you’re getting your money’s worth. Remember… You’re giving up part of your hard-earned nest egg for a future benefit that you may never receive.

The obvious alternative to longevity insurance is to amass enough wealth during your earning years to be comfortable in retirement without having to worry about running out of money. The flip side is that having a guaranteed stream of income later in life potentially frees you up to invest more aggressively as you approach retirement (and beyond).

As for us, we’re saving and investing aggressively, and have no intention of needing longevity insurance as a stopgap during our retirement years. Nonetheless, it’s still worth knowing that it’s out there.

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» From the Archives (August 24th – August 30th)
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» Buying Term Life Insurance, Part V (Epilogue)
» Buying Term Life Insurance, Part IV

Unless you live in a cave (and maybe even then), you know that your credit score is incredibly important when it comes to securing credit. But did you know that it’s also used for much more than that? What follows is a list of five other areas of your life that can potentially be impacted by your credit score…

1. Renting property – Many (if not most) landlords now run credit checks on prospective tenants. Think about it… They’re essentially giving you a credit line when you sign a year long lease, but are allowed to pay it off in monthly installments. In many cases, bad credit = no apartment (or house, or whatever).

2. Cell phones – Cell phone companies typically check your credit before signing you up for service. Here again, they’re essentially extending you a credit line and they want to be sure you’re good for the money. Not only are they concerned that you might rack up a bunch of airtime charges and be unable to pay for them, but they’re also letting you walk out the door with a shiny new handset at a (sometimes steep) discount. They want to be sure that you’re good for the standard monthly charges. Crappy credit might result in you being shunted over to a pay-as-you-go plan, and the hardware deals might not be as good.

3. Future credit card agreement changes – It’s not uncommon for credit issuer to run routine credit checks (so-called ’soft pulls’, which don’t show up as credit inquiries on your credit report) on existing customers. If your credit score takes a nosedive, you represent a bigger risk, and they might change the terms of your agreement (e.g., increase your interest rate) to reflect that.

4. Car insurance – Car insurance issuers are increasingly looking at credit scores as a way to gauge risk. If you’re reckless in one area of your life, you might not be a good bet in other areas. This can result in higher premiums, or they might simply decide not to cover you.

5. Employment opportunities – I’ve never experienced this one first hand, but I’ve heard that it’s increasingly common for employers to include a credit check when looking into the background of prospective employees. In short, they’re looking to see if you’re responsible. Credit reports also provide an employment history. Of course, they can only do this with your permission, so hopefully you read all of that paperwork that they give you when you apply before signing anything. Then again, if you decline they’ll more than likely show you the door.

If you want to check your FICO score, you can use this myFICO discount code to save 20%, or you can get a free credit score from FreeCreditReport.com.

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Here’s a quick tip for saving money on your life insurance policy… Pay the premiums annually if at all possible. Most insurers give you the option of paying monthly, quarterly, semi-annually, or annually. But guess what? Paying more often than once per year typically costs more. While insurers typically don’t disclose the effective annual rate of this additional payment, which is essentially interest, you can figure it out yourself using this calculator.

Take, for example, a $360 term life insurance policy. Let’s assume for the moment that the monthly payment option requires twelve payments of $32. That’s just two bucks extra per month… Totally worth it for the added flexibility, right? Well, if you do the math, that two bucks works out to an APR of 14.3%! That’s a pretty steep price to pay in order to avoid paying your premium up front.

As it turns out, it’s just this sort of billing practice that got Zurich Direct into hot water last summer. As a result, we ended up receiving a whopping $2.52 from the settlement even though we always paid for our policies annually.

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Related Articles at fivecentnickel.com:

» How to Save Money on Life Insurance
» Carnivals – Week of 06/04/07
» How to Save Money on Car Insurance
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A couple of recent articles (one at The Simple Dollar and another at Money Smart Life) got me to thinking about living in a flood zone and how important it can be to have flood insurance. Can you imagine what it would cost to recover from a flood? And are you prepared to foot that bill if it ends up happening? In most cases, the answers to these questions are no and no.

Before we go any further, let’s talk a bit about what exactly flood insurance is (and isn’t). Unlike a standard homeowner’s insurance policy, flood insurance covers losses due to flooding. A standard flood policy covers things such as structural damage, damage to your furnace, water heater, and/or air conditioner, debris cleanup, and damage to floor surfaces such as carpeting and tile. You can also buy a policy to cover your belongings.

If you live in a high risk area, chances are your mortgage lender requires you to carry flood insurance. But how exactly is flood risk determined? In general terms, FEMA has identified land areas (referred to Special Flood Hazard Areas) that run a 1% or greater risk of flooding in any given year. These are referred to as 100 year flood zones, and being located in one typically means that you have (and should probably want) to be carrying flood insurance.

While 1% per year doesn’t seem like a lot, consider the odds over time… Indeed, the chances of having at least one flood in a 100 year flood zone during a 30 year span (the life of a typical mortgage) is just a shade under 26%. That’s right, if you live in a 100 year flood zone, the odds are a little better than one in four that you’ll experience a flood during the life of a standard 30 year mortgage. Even over 10 or 20 years the chances of a flood are still pretty substantial, at 9.6% and 18.1%, respectively.

So how do you know if you need flood insurance? In many cases, your mortgage lender will tell you. But if you’re interested in checking things out yourself, you can take a gander at the flood maps — these are sometimes available at your local library, your county planning commission, etc. You can also check them out online at the FEMA Map Service Center. Alternatively, you can search for your address over at FloodSmart.gov.

Finally, how do you get flood insurance? If your community participates in the National Flood Insurance Program (NFIP) you should be able to purchase flood insurance from a local insurance agency. You can search for agents in your area by going here. Just keep in mind that there’s typically a 30 day waiting period before flood insurance takes effect, so you can’t simply wait for it to start raining before you call.

When considering your options, please keep in mind the importance of insuring against events that you cannot afford to deal with.

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» Carnivals – Week of 05/21/07
» The High Cost of Hurricane Insurance
» Hurricane Preparation and Survival Tips
» From the Archives (May 4th – May 31st)
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» Buying Term Life Insurance, Part V (Epilogue)
» Buying Term Life Insurance, Part IV

Just a quick note to say that my wife’s erroneous medical bill has been taken care of. After a couple months of wrangling, we just got an updated bill that has been reduced from $149.50 to $5.50. Interestingly, it was the insurance company that finally stepped in and sorted things out when the doctor’s office couldn’t seem to get the claim right. This is just further evidence that you should always be on the lookout for medical billing errors and always appeal your health insurance denials.

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Last week my wife was out and about with the boys in our Honda Odyssey when she got rear-ended. Fortunately, it wasn’t a big deal, and the damage appears to have been largely cosmetic. Still, she went ahead and called our insurance agent, who advised that she call the police. She did, and when they showed up she and the other driver explained what happened (it was completely the other driver’s fault) and they wrote up the report.

We subsequently learned that we could proceed one of two ways: (1) We could go through our insurance (State Farm), pay the $500 deductible up front, and then get it back when we they get the money back from the other insurance company, or (2) we could contact the other driver’s insurance company (Grange), get the car fixed, and have them pay for it directly.

Long story short… My wife ended up contacting Grange directly late last week, and yesterday she took the car in for an estimate. As it turns, they’ll have to replace the bumper to the tune of a bit over $700. Stay tuned for further details.

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Related Articles at fivecentnickel.com:

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This past November, my wife had to see a doctor at our local Urgent Care. Unfortunately, when the bill showed up the claim had been denied. The reason? Out of network. The problem? It wasn’t out of network! It’s supposed to be a $20 co-pay with the rest going to insurance. So… I called the Urgent Care billing office on December 15th. They confirmed that it should’ve been covered, and promised to re-submit the claim. Fast forward to this week…

We just got another bill from Urgent Care. Same deal — they want the full balance. This time, however, it seems that our insurance company decided to split the difference and apply it to our deductible instead of flat-out denying the claim, or paying it like they’re supposed to. When I called the Urgent Care billing office, they weren’t sure what went wrong, but promised to re-file the claim. Again.

Instead of waiting another month to see if the problem was still there, I decided to call Blue Cross & Blue Shield directly. After a bit of noodling around, the CSR seems to have figured out the problem. It seems that the doctor filed the claim using his own taxpayer identification number (TIN) instead of the TIN for the Urgent Care clinic. She further stated that whenever this happens, they have to go in and override it by hand. Whatever.

The bottom line here is that a less persistent person would’ve assumed that the insurance company knew what they were talking about, or perhaps lost track of the situation entirely and ended up paying the bill. Always double-check your medical bills. And always appeal your health insurance denials.

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Related Articles at fivecentnickel.com:

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» Carnivals – Week of 02/19/07
» Non-Electronic Online Bill Pay Question
» Save on Medical Care – Part IV
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» The Best of February 2007
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As important as your saving and spending habits are, being truly financially responsible involves much more. To this end, I’ve put together a list of ten ways to cover your ass(ets)… This list is by no means exhaustive, but it’s a good starting point.

(1) Buy life insurance. Of course this really only applies if someone depends on you for support. I’m a big fan of term life insurance — as they say, buy term and invest the difference! And don’t just rely on the insurance that you get through your employer… The base coverage may not be enough for your needs, and it’s also tied to your employment — lose your job and you’ll lose your insurance. Also, if you’re young and in good health, you can probably get a term policy for less money by shopping around instead of buying additional group through your employer.

(2) Buy long term disability (LTD) insurance. For the average Joe, the odds of suffering a debilitating injury are considerably higher than the odds of dying young. What if you couldn’t work? How would you get by? Long term disability insurance covers your butt in the event of that you suffer, well, a long-term disability (duh!).

(3) Buy health insurance. When you’re young and in good health, you feel invincible. But even a relatively minor health problem can prove to be a major setback if you’re uninsured. And a major health problem can be catastrophic. Even when I was young and dumb (and otherwise uninsured), I carried a major medical policy. It was only $50 or per month for a policy that covered accidental injuries and illnesses requiring hospitalization. While it didn’t cover things like the kidney stone that I had (and passed – ouch!), it did cover the stitches that I needed when I took a line drive off the noggin while playing slow pitch softball.

(4) Buy a personal liability umbrella insurance policy. Carrying personal liability insurance is particularly important for homeowners and/or those with substantial personal assets. Standard homeowner’s, renter’s, and auto policies provide a degree of liability protection, but a personal liability umbrella policy picks up where these other policies leave off.

(5) Write a will (or have one written). We finally took care of this at the end of 2006. Prior to that, we had a do-it-yourself will that was written back before we had kids #3 and #4. Bottom line: Having a will greatly simplifies the process of disbursing your assets after your death, and can go along way toward easing unnecessary burdens on your loved ones during an exceptionally difficult time.

(6) Name guardians for your kids. If you don’t, the court will. Hopefully they’ll make a good decision, but there are no guarantees. We took care of this along with our wills.

(7) Write a living will (or have one written). If you have specific wishes when it comes to healthcare decisions that might need to be made while you’re incapacitated, then you’ll want to arrange to have a like-minded person at the helm.

(8) Grant power of attorney (in writing) to someone you trust. If you’re ever incapacitated, someone is going to have to make financial decisions on your behalf. Wouldn’t you like to be the one who chooses who this will be? Same goes for healthcare power of attorney.

(9) Update your beneficiaries – If you don’t name beneficiaries, your investment accounts, IRAs, life insurance, etc. will go into your estate and will have to be probated. In our case, my wife and I have named each other as primary beneficiaries, and our testamentary trust as secondary beneficiary.

(10) Keep everything updated, and re-assess your needs periodically. This is an incredibly important point. If you don’t re-evaluate your situation periodically, your hard work will be all for naught, as your needs will change over time. For example, we bought term life policies in the summer/fall of 2005 but, after a number of major changes in our life, we needed to increase our coverage just one year later.

So there you have it… Ten (relatively) simple ways to cover your ass(ets)!

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Remember that Zurich Direct class action lawsuit that I first told you about back in July? Since we chose to do nothing response to original notice, we remained a member of the ‘class’ and were thus entitled to a share of the $7,145,007.25 settlement.

Well, our settlement checks finally arrived. They were actually dated December 15th, and I’m amazed that they found their way to us since they were sent to an old address that we haven’t lived at since 2002. Care to guess how much we got? Our share was a whopping $2.52 — and they split it across two checks. Woohoo! Early retirement here we come!

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Here’s Part II of my thoughts on Consumer Reports’ ten steps to simplifying your financial life. Today we’ll be covering steps 4-6…

(4) Automate investment tracking. Keeping count of your stock and mutual-fund shares and their prices can be tedious and time-consuming. But software such as the free Quote­Tracker (www.quotetracker.com) can automatically update your portfolio using online data sources. You can also import data from QuoteTracker into spreadsheet programs such as Microsoft’s Excel.

(5) Dump your extra credit cards. Why carry a dozen when a few will do? Get rid of cards you never use and merchant cards you applied for solely to get a discount. Keep your oldest card because the longer your credit history, the higher your credit score. If you carry a balance, keep a card with a low fixed interest rate. Card issuers can raise a fixed-rate card’s interest rate, but they must give you 15 days’ notice. By contrast, an issuer can change the interest rate on a variable-rate card regularly and without advance warning. If you’re not satisfied with the cards you have and want to see if there are better deals, try the search engines at www.bankrate.com, www.cardratings.com, and www.lowcards.com.

(6) Use one home and car insurer. You’ll have to deal with only one agent, and you’ll snag a multipolicy discount as high as 20 percent on either your auto or homeowners policy or both.

My thoughts on these:

(4) Great tip. I do this with Quicken. Although I download share prices, however, I still update the transactions manually. Not sure why. I guess I’m just weird that way. That’s probably why I keep a paper checkbook register as well as one in Quicken, and can’t sleep unless they match at the end of the month. I’m an obsessive compulsive account balancer!

(5) I’ve never been one for store credit cards, and we’ve never had a bunch of regular cards, either. We currently have three total reward credit cards, and typically use only one or two at a time depending on what we’re doing (all are paid in full at the end of every month). That being said, it’s always tempting to jump on a 0% balance transfer credit card offer, or maybe a cash bonus or a bunch of free miles.

(6) This advice is spot on. We use a single insurer for everything. Not only does it simplify things, but we get a great discount for packaging everything together.

See also: Part 1, Part 3, Part 4

[Source: ConsumerReports.com]

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My wife and I received our insurance ING Reliastar term life insurance policies at the end of last week and everything looked good. Thus, we wrote our checks and sent them in. As soon as we get confirmation of receipt, I’ll go ahead and contact Lincoln National Life for a prorated refund of our premiums. All in all, it took seven weeks from our initial term life application with Intelliquote to get the policies in our hands.

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At long last, here’s the fourth and final part of my mini-series on saving on medical care. The article upon which this is based was writen by Sid Kirchheimer and originally published in Bottom Line/Personal. Today we’ll be covering tips #7 and #8. Here goes…

Tip #7: Watch for double billing — It’s not uncommon for hospitals to double bill for certain things. For example, they might charge a daily room rate as well as for sheets and pillows. Ask the hospital’s patient advocate if these things aren’t already included in the room rate. Same goes for things related to operating room time — is it really legitimate to charge separately for scrubs, masks, and gloves? It doesn’t hurt to ask.

Tip #8: Don’t pay for your last day — Hospital patients are typically charged for an entire day their first day no matter how late they check in. In return, hospitals aren’t supposed to charge for the last day, or at least not if you check out by a certain time. So find out about the witching hour, and then be sure your doctor releases you before that time rolls around. If the doctor can’t come by to see you in time, take it up with the hospital — you shouldn’t be charged for someone else’s schedule constraints. This is actually something that we dealt with when our first child was born. As long as we were out by a certain time (maybe 2PM), the last day was free of charge. Needless to say, we got out in time.

See also: Part I, Part II, Part III

[Source: Bottom Line/Personal]

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My wife and I just heard (via e-mail) from Intelliquote that our new term life insurance policy applications have been approved by ING Reliastar Life Insurance Company. We’re supposed to receive the new policies within 1-2 weeks, at which point we’ll be free to cancel our old term life policies with Lincoln National Life. Thus far, the process has taken just a shade under six weeks, which is almost exactly how long it took last year. I was actually expecting it to take a bit longer this time around, as we asked for substantially more coverage, and were told that the underwriting process would be a bit more involved. Indeed, the medical exam was more comprehensive, requiring an EKG in addition to routine blood and urine tests as well as height, weight, and blood pressure readings. But in the end, the entire process took about the same amount of time.

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Related Articles at fivecentnickel.com:

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I wrote awhile back about choosing between an HMO and a PPO for our new health insurance plan. Thus, I was quite interested the other day when I ran across a Consumer Reports survey on this very topic…

First off, did you know that annual health insurance premiums for a family have increased by 59% since 2000? That’s six times the inflation rate! And employers are increasingly passing those higher costs on to their employees.

They also surveyed over 35,000 people about their HMOs and PPOs and found that only 64% of individuals were “completely satisfied” or “very satisfied” with their plan. Here are a few more interesting tidbits:

HMOs scored slightly higher in overall satisfaction than PPOs, which dovetails with other research that finds many consumers somewhat more willing to give up choice of provider to get lower costs.

We actually went with the PPO because we feel the exact opposite — we value choice over cost.

People in HMOs had more trouble obtaining care than members of PPOs.

No surprise there.

Nearly one-third of all PPO members reported billing problems, nearly three times the rate for people in HMOs.

This isn’t particularly surprising, either… HMOs have very slimmed down, simple billing systems.

There was no difference between HMOs and PPOs in levels of satisfaction among those with chronic conditions, except for people with back pain. Those patients were happier with PPOs.

This is sort of a curious finding… I’d expect PPOs to result in happier patients across the board, but it seems that amongst the chronically ill, there is only a slight advantage to PPOs.

[Source: Consumer Reports]

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Here’s part three of my mini-series on saving on medical care. The article upon which this is based was writen by Sid Kirchheimer and originally published in Bottom Line/Personal. Today we’ll be covering tips #5 and #6. Here goes…

Tip #5: Ask for a daily itemized bill — When you’re admitted to a hospital, specify (at registration) that you want an itemized bill. When it arrives, make sure the number of doctor’s visits, tests, etc. jive with reality. And if you see any ‘miscellaneous charges’ or generalize ‘lab fees’ be sure to ask for clarification. If necessary, ask to speak to the patient’s advocate. If they can’t help you reduce ridiculous overcharges and flat-out mistakes, then consider hiring an independent medical billing consultant, who will work on your behalf in return for a percentage of the amount that they save you.

Tip #6: Bypass the hospital pharmacy — Hospital pharmacies are well known for their inflated prices. If you’re taking medications on an ongoing basis, bring them with you. If you have a chance to talk to your doctor about which drugs you’ll likely be receiving during your stay, ask him/her to write prescriptions for you such that you can have them filled elsewhere. If he/she won’t do it, at least bring any non-prescription drugs that you are likely to need with you from the outside. And as always, as for generics whenever possible. You’ll get the exact same drug at a fraction of the price.

See also: Part I, Part II, Part IV

[Source: Bottom Line/Personal]

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I meant to follow up on this last week, but it somehow slipped my mind… Our term life insurance applications arrived two days after we applied through Intelliquote, and we had our portamedic appointment four days later. Since we went up quite a bit in terms of coverage, my wife and I both had to have an EKG to go along with the basic blood work and urine sample. Now we’re just waiting on the underwriters. We’ve been told that because of the amount of coverage that we’re buying, this will take as long as six weeks.

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Related Articles at fivecentnickel.com:

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Here’s part two of my mini-series on saving on medical care. The article upon which this is based was writen by Sid Kirchheimer and originally published in Bottom Line/Personal. Today we’ll be covering tips #3 and #4. Here goes…

Tip #3: Don’t pay for a followup visit — This is one that has always bugged me… You go to the doctor for some sort of problem, they give you a course of treatment then ask you to come back in ten days. Guess what? You’re going to be billed for a brand new visit upon your return, even if the doctor only glances at you for a few seconds and then goes on his/her merry way. The most frustrating thing for us has been when our kids have had ear infections and the doctor wants them to come in for a quick followup ear check — even with insurance, that doubles the cost of an ear infection (not including prescriptions), and our kids have had a lot of ear infections. If you don’t have insurance, why not tell your doctor (during your initial visit) that you’re paying out of pocket, and ask them to waive the fees on the followup (assuming that it’s just a cursory check)? This is especially likely to work if you’re a regular patient, although it might require a bit of wrangling at the checkout desk (or with the business office), as they’re programmed to nick everyone for everything.

Tip #4: Confirm that tests are necessary — In the interest of covering their butts, it’s possible that doctors will order unnecessary medical tests. The motivation here is simple: even if they don’t think a particular test is necessary, failure to order it opens the door for future negligence lawsuits. Unless your health insurance is paying for the test, this sort of behavior can have a huge negative impact on your bottom line. And even if you have good health insurance, this sort of stuff will contribute to spiralling premiums and reduced coverage going forward. So the next time your doctor orders a test, ask him/her what they hope to learn from it. Chances are they’ll have a good answer. But if they don’t, you could save yourself some money.

See also: Part I, Part III, Part IV

[Source: Bottom Line/Personal]

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I just ran across an article in Bottom Line/Personal by Sid Kirchheimer that’s chock full of tips on how to save on medical care. While it’s not available online, some of the tips are good enough that I thought I’d create a mini-series and run through them here. Here goes…

Tip #1: Negotiate — If you don’t have health insurance, as your doctor for a discount. Apparently only 13% of patients bother doing this but, when they do, the majority receive a discount. In fact, pretty much all insured patients automatically receive such discounts, as major insurers have negotiated ‘Usual, Customary, and Reasonable‘ (= reduced) prices for pretty much everything. We’ve never had to deal with this one since we’ve always had good health insurance. However, it definitely seems like it’s worth a try. The worst they can do is say no.

Tip #2: Get blood tests done at the lab — If you need blood work done, you’ll often end up paying for a doctor’s visit plus added (and inflated) fees for drawing the blood and running it to the lab. If your doctor won’t waive these fees, another option is to go directly to the lab to have the test done (your doctor should be able to supply the necessary paperwork). We’ve done this ourselves in the past, although in our case we didn’t have to ask — were referred directly to the lab by the doctor.

Stay tuned for more tips for saving on medical care.

See also: Part II, Part III, Part IV

[Source: Bottom Line/Personal]

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Just a quick update on our recent decision to buy new term life insurance policies… Within a day of applying (actually, within about twelve hours of applying — we did so at 11:30 PM), a rep from Intelliquote called us to veridy some information and to set up the portamedic appointment. We’re scheduled for the blood work, etc. during the middle of next week, and our application paperwork should be showing up between now and then. So far so good!

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I mentioned the other day that my wife and I are having second thoughts about the value of our term life insurance policies. After stewing over that for a few days, we’ve decided to re-do our policies — but this time we’re putting more thought into the amount that we’re purchasing so we won’t go through this again in a year.

I don’t have time to go into the specifics right now, so I’ll just say that I’ll be insured at roughly 20X my current annual salary, and we’re also increasing my wife’s policy amount substantially — she’s a stay-at-home mom, so it’s harder to put a specific dollar amount on her contributions. But it’s a lot. I actually have an entire post on buying life insurance in a one income family percolating in the back of my head, but that’ll have to wait for another day. Anyway, back to the story at hand…

As we did the last time we re-worked our term life insurance policies, we went through Intelliquote.com to find our new policies. We ended up selecting policies from ING ReliaStar Life (yes, that ING). They’re A+ rated, they had by far the lowest price when it came to my policy, and they came in second (by a hair) for my wife. Thus, we decided to go with them for both policies to make it easier to keep track of things.

I’ll be updating regularly as things progress just as I did last year. That way, those of you that are following along can get a feel for what the process entails.

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Just about a year ago, my wife and I decided that we were underinsured given our then-current income and living expenses, so we shopped for and bought new term life insurance policies. And now here we are, feeling the exact same way…

This last year has been good to us both personally and professionally and, following our move, we have a bit more in the way of liabilities, as well as considerably more income to replace if anything bad were to happen to me. Thus, we’re once again feeling a bit ‘exposed’ when it comes to life insurance, and we’re thinking of re-doing our policies. Again. The trouble here is figuring out how much we need.

This is a common quandary… If you’re single with no dependents, then you might not even need life insurance coverage. But if you have dependents, you need to buy enough life insurance such that, when combined with other sources of income, your life insurance will replace your earning potential, plus enough to offset any additional expenses they will incur replacing services you currently provide (for example, if you do the taxes for your family, the survivors might have to hire a professional tax preparer).

Your family might also need extra money to make some changes after you die. For example, they may want to relocate, or your spouse may need to go back to school to put themself in a better position to support the family. In short, if you aim too low then you’re jeopardizing your family’s well-being, but if you aim too high then you’re wasting your money.

In very general terms, it seems that there are two basics approaches to determining the ‘right’ amount of life insurance. One of approach simply involves buying a policy that will pay a certain multiple of your annual salary. The difficult thing is determining which multiple is right for you… 8X? 10X? 12X? 15X? Or maybe 20X? This really boils down to what you need your life insurance to do.

If you want your loved ones to be able to replace your current income without drawing down the principal provided by the inurance policy, then you might want to aim for 20X — this amount would allow your loved ones to draw out your annual salary (which would equal 5% of the total) per year without touching the principal as long as they’re able to keep investment returns in the neighborhood of 5%.

If they can get by on less, or if you don’t mind the money running out at some point in the future, then you can get by with less. Of course, if you’d like your beneficaries to be able to pay off some lump sum items (e.g., funeral arrangements, paying off the house, etc.) and still maintain a steady stream of income going forward, then you might need to ratchet up this number.

The other approach is to use an online calculator (or a trusted financial advisor — just be sure not to ask your insurance salesman!) to estimate your insurance needs. Here’s an example of one such life insurance calculator. Basically, you input a bunch of variables relating to current income, desired income going forward, assets, liabilities, anticipated final expenses, etc. and voíla! You have your answer. Of course, the validity of this answer is only as good as the numbers that you put in, so think carefully.

Another thing to watch out for is the inevitable erosion of the buying power of your life insurance policy. After all, a million dollars won’t be worth a million dollars 20 years from now. While the group life policies that are available through many employer benefits packages are usually tied to your salary, such that they ratchet up over time, the same is not true of the typical term life policy. So here again, it’s important to think carefully about what you want your life insurance policy to provide over the long term and plan accordingly.

So… Where does that leave us? I currently have 3X coverage through my employer as well as roughly 4X my new, higher salary through the term life insurance policy that we bought from Lincoln National last year. Obviously, I think that we need to increase this amount, but I’m still unsure how high we want to go.

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I’ve spent the last couple of days poring over my benefits options for my new job. Choose a health plan, decide on dental coverage, pick a retirement plan, opt for optional group life coverage, etc. That’s all well and good, but I couldn’t help but shake my head when I looked at the brochure for the optional Accidental Death and Dismemberment policy. I just don’t get it (even though I ended up opting for it).

I have life insurance to protect my family if I die, and I have long-term disability (LTD) insurance in case I suffer a debilitating injury or illness. So why do I need to add extra insurance for a special kind of death? You wouldn’t buy death-by-heart-attack insurance, would you? Or death by choking on a meatball insurance? Although that would arguably fall under ‘accidental’ — but I digress. And why do I need to insure my limbs? Sure, it would suck if I lost a limb (or an eye, which is also covered in most cases). But insure it? What’s the point?

If I have a debilitating injury, I’ll be covered by my LTD policy (plus worker’s comp if it happens on the job). While there might be circumstances under which these policies make sense (e.g., high-risk jobs or hobbies), I just can’t figure out why this sort of coverage is necessary. Sure, high-risk jobs or dangerous hobbies might be a good justification, but these sorts of things often make you ineligible for AD&D coverage.

Despite all this, I have to admit that I still went for it… I’m not sure why, but at just $2.80/month for $100k in coverage for myself and my family, I figured it really couldn’t hurt.

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Alright, I’ve let this slide far too long… It’s time to choose our health insurance plan. And when I say that it’s time, I really mean it… The paperwork is due tomorrow. My new employer offers three options when it comes to health insurance: (1) a traditional indemnity plan, (2) a Preferred Provider Organization (PPO) plan, and (3) a Health Maintenance Organization (HMO) plan. We’ve already ruled out the indemnity plan, as the premiums are high, and the coverage is overkill. So that leaves us with the PPO and HMO options. While they’re both administered through Blue Cross/Blue Shield, there are a number of differences. In very general terms, the PPO is more flexible than the HMO, but it’s also more expensive. Here’s a more detailed rundown of the key differences:

Monthly Premiums

The PPO is $50 more per month (for a family) than the HMO.

Advantage: HMO.

Copayments

The basic copayment for an office visit under the PPO is $20 vs. $15 for the HMO.

Advantage: HMO.

Deductibles

The PPO is kind of complex in this regard. There’s a basic $300 deductible per person ($900 for the family overall) for in-network, in-state care. If you’re travelling out-of-state, but visit an in-network doctor, a separate $300/$900 deductible applies. After that, we’d pay 10% of medical costs in-state and 20% out-of-state but in-network. Finally, if you go out-of-network, there’s a $400/$1200 annual deductible. On top of this, we’d be responsible for 40% of the usual, customary, and reasonable (UCR) charges, plus we’d be subject to “balance billing” (i.e., we’d have to pay the amount above the UCR costs, which is normally written off by in-network doctors). The HMO covers 100% of everything beyond the initial $15 copay (i.e., there’s no deductible, but see “Flexibility,” below).

Advantage: HMO.

Flexibility

The HMO requires us to name a primary care physician (PCP) for each person in our family, and all car has to be coordinated through the PCR (e.g., you need a referral to see a specialist). Also, the HMO network is completely in-state. Thus, if we’re travelling and need to see a doctor, we’re S.O.L. That being said, we’d still be covered for life-threatening emergencies at the in-network level no matter where we are. On the other hand, the PPO doesn’t require referrals to see specialists, and they have an out-of-state network (although it’s more restrictive).

Advantage: PPO.

Pharmaceuticals

Pretty much the same coverage between the two… $10 copay for generic drugs, $25 copay for most others. Both plans maintain a formulary/preferred list, and coverage for certain drugs not on this list is not as good. But they both claim that their lists only exclude redundant drugs (i.e., those that do the same thing as something already on the list). The only difference is that the prescriptions have to be written by in-network doctors, and that’s impossible if you’re out-of-state on the HMO (unless it’s a life-threatening emergency).

Advantage: PPO (by a hair, although this really ties back to flexibility).

Maximum Limits

The HMO has a maximum lifetime limit of $2,000,000. I couldn’t find an equivalent number in the PPO literature, but I’m not particularly concerned about the HMO limit. I know, I know… Famous last words, but… We can always switch plans from one year to the next, so we can easily circumvent this limit (heaven forbid we ever need to) so long as we don’t rack up millions in medical bills in a single year.

Advantage: Non-issue.

‘Intangibles’

We live in a relatively small town, and are therefore concerned about the availability of specialists, especially for our kids. About an hour from us there are several major research hospitals, each of which includes a dedicated children’s hospital. As it turns out, these are all covered by both the PPO and the HMO.

Advantage: Tie.

While there are a number of other relatively minor differences, they’re really not worth mentioning. So… Just tallying up the numbers, the HMO comes out way ahead. Then again, it’s probably not fair to weigh everything here equally. For example, the complete lack of ‘regular’ coverage when we’re out-of-state is a bummer for the HMO. Then again, we’d save $600 on the premiums alone, plus additional money on copays and deductibles, if we went with the HMO, so we could easily self-insure against a few routine medical visits on the road. And if anything especially nasty cropped up, we’d still be covered.

Right now we’re leaning toward the HMO. The good thing is that open enrollment is only two months away, so we can easily change our mind with an effective date of January 1, 2007. Given the above information, what would you do?

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My wife and I just received word today that Zurich Direct Life Insurance Company has recently settled a class action lawsuit, and we’re eligible for a piece of the settlement. Hurray! It’s our ticket to early retirement and life on easy street. Or is it?

The packet of information that we received leads off with this passage, explaining why we received the notice…

You received this notice because Zurich Life Insurance Company of America, now known as Chase Insurance Life Company (”Zurich Life”) records show that you are a member of a class of policyholders who will be affected by the nationwide settlement of a class-action lawsuit. The Court has given its preliminary approval to the Settlement, and has ordered that this Notice be sent to you and all other Class Members so that you may consider your options.”

Our options include remaining a member of the Class and receiving benefits of the settlement, removing ourselves from the Class, and staying in the Class, but objecting to the Settlement.

So what did Zurich Life do, and what are they offering in terms of reparations? In short, the Class Members alleged that policy holders who paid their premiums monthly, quarterly, or semi-annually paid more per year than those that paid annually even though such disparities were not allowed in the language of the policy, and further that Zurich did not disclose the magnitude of this “Dollar Difference.” The Class Members also alleged that Zurich should have presented this rate differential in terms of an APR.

This actually isn’t all that unorthodox — many companies (insurance or otherwise) charge different rates depending on the frequency of your payment… Pay for a longer term, get a better price. So where’s the problem? In fact, Zurich argued that all policyholders paid only those premiums that they agreed to, and that the rates are clearly set forth in the policy. They further stated that the Dollar Difference should have been apparent to its policyholders (I have to agree with them here…

I’m not terribly sympathetic toward people who get “ripped off” because they can’t figure out the different between two smallish numbers. Here’s an example: Pay monthly and your rate is $10/month, or pay yearly at $100/year — do you really need someone to spell out the difference for you?

Zurich further claimed that it would be inappropriate to characterize the premium differences as having an APR since insurance premiums are not a debt. I’m less convinced on this point, as you’re essentially financing your policy when you opt to pay monthly instead of paying the full year in advance. But here again, I’m not terribly sympathetic to the Class Members (even though I’m apparently one of them).

Regardless of their claims of innocence, however, Zurich Life has agreed to pay $7,145,007.25 to resolve the claim. Once the lawyers get their cut (they’re asking for 30%), the remainder will be divided up amongst Class Members in proportion to the Dollar Difference that they incurred during the period March 1, 1997 through August 31, 2005.

To be honest, I can’t recall ever having paid our premiums any way other than via annual payments, but who am I to argue with them? We had our Zurich Life policies for a few years before we switched to John Hancock Life Insurance, which we ultimately cancelled last fall after jumping into our most recent round of shopping for term life insurance (we’re currently insured through Lincoln Financial). I have no idea what we’ll ultimately receive in terms of the settlement, but I’m willing to bet that it’s not very much.

Okay, back to the settlement. On the surface, it seems a bit odd that Zurich Life would settle given the circumstances. That being said, I’m obviously not privy to the details of the case. On top of this, they were almost certainly looking at their risk when they made this decision (they’re an insurance company, after all!). As it turns out, the total Dollar Difference summed across all policyholders during the time period in question (and hence the amount they could’ve gotten nailed for) comes to a cool $27.2 million. Ouch. Suddenly $7.1 million doesn’t look so bad.

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If you’ve ever bought a home, them you’re most likely familiar with the term ‘title insurance.’ But do you know exactly what it is? Simply stated, title insurance protects against possible losses if someone else can claim ownership of your property after closing.

Before you purchased your home, it may have undergone one or more ownership changes, and the land itself likely underwent even more transfers. While properties are typically subjected to a ‘title search’ prior to closing, wherein past deeds, wills and trusts are examined to make sure that the title has passed lawfully from one owner to the next, and an expert examiner also checks for outstanding liens and judgments, it’s always possible that something was missed. For example, someone may have forged a signature during a prior closing, or a legitimate (albeit previously unknown) heir may surface one day to claim rightful ownership of your property.

So now that you know what it is, here are a few more tidbits about the ins and out of title insurance…

Do you have to buy title insurance? No, not if you’re paying cash for the property. But if you’re borrowing, the lender will almost certainly require you to purchase a policy (called a ‘Loan Policy‘) to protect their interests.

Who does title insurance protect? The Loan Policy covers the lender up to the amount of the mortgage, and it does nothing for you. But you can (and probably should) purchase a policy to protect your own interests, as well. An owner’s policy is typically issued on the full purchase price, and also covers legal fees involved in defending a claim to your title.

How often do you have to pay, and how long does it last? Title insurance is purchased for a one-time fee at closing. The Loan Policy lasts for the term of the mortgage, whereas an owner’s policy typically lasts as long as you or your heirs maintain an interest in the property.

Who pays for title insurance? That depends. It’s usually the buyer, although in some locales the seller pays for it as part of their obligation to provide a good title to the buyer. In our area, it’s customary for the seller to pay for it. And, ufortunately, the buyer pays on the other end of our move. Thus, we’re actually going to get nicked for title insurance twice.

What happens if you refinance? You shouldn’t need a new owner’s policy, as you’re still the owner of the same piece of (insured) property. However, the Loan Policy is terminated when the loan is paid off. Thus, even if you are refinancing through the same lender, you need to purchase a new Loan Policy.

For more details on title insurance, stop by the American Land Title Association’s website. See also the Mortgage Professor’s web page on title insurance.

For more information on moving, check out my Roadmap for a Successful Relocation.

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Yesterday afternoon I set aside a bit of time to arrange for a homeowner’s insurance policy on our new house, as well as to transfer our other policies from from our current insurance agent to one on the other end of our move. We’ve used State Farm Insurance for years and, given that we’re actually moving back to an area in which we used to live, I thought I’d give our old State Farm agent a call. It’s not like we had a close relationship with the guy, but we’d never had any problems. While his office is actually a bit out of the way (eight or so miles from our new house, when it seems like there’s a State Farm agent on just about every corner), I figured that we might as well give him our business…

Well, when I called his office I was greeted by a voice mail system that announced, among other things, that their office is closed for lunch. No problem, I thought, it’s not lunch time. I’ll just hit ‘zero’ and get to the receptionist. Well, much to my surprise, I was then greeted by a second round of voice mail announcing that they were out of the office all day, and would be gone the following day (today), as well. What the heck? An insurance agent that shuts down his entire office on a seemingly random Wednesday and Thursday? That’s definitely not what we’re looking for when it comes to customer service. Yes, I’m sure he probably has a good reason for being away. But that doesn’t excuse the absence of all other office staff. In short,

So what’s a guy to do? Simple. Hop on over to the State Farm web site, do a quick search, and pick one of the bajillion other agents that are out there. As it turns out, there’s one just two miles down the road from where we’ll be living. And they actually answered the phone. Their reward? A brand new homeowner’s policy, as well as the right to re-issue several other policies that need to be changed up due to the fact that we’ll be moving in from out of state.

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Awhile back, I wrote about the fact that John Hancock automatically renewed our term life insurance policies even though the credit card that they had on file was well past its expiration date (the account was still open, but the card itself had expired). In addition to sending in letters requesting that they cancel our policies, I also decided to dispute the charges with the card issuer (Chase) on the grounds that the charge had been made against an expired card. As of yesterday, I can now say that the credit card dispute worked. We still haven’t received a response to our cancellation requests, but we both just got letters stating that our policies had been “terminated due to non-payment of the premium.” Now we have a credit balance with Chase, but we’re not out any money.

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Here’s part two of Kitty Werner’s article on avoiding costly home insurance mistakes (Part 1). Just to recap, Werner argues that you could save hundreds of dollars per year on home insurance, and perhaps many thousands of dollars in the event of a serious mishap, if you just take a few simple precautions. Included here are the three remaining ‘traps’ to look out for…

TRAP #4: GAPS IN COVERAGE

As a general rule, homeowner’s policies cover most common types of damage, including that caused by fire, smoke, rain, lightning, wind, hail, snow, ice, sleet, vandalism, theft, explosions, civil commotions, vehicles, planes and problems stemming from the malfunction of the electrical system, plumbing, heating, air conditioning or appliances.

Not covered in standard policies is damage from earthquakes and floods, both of which are far more prevalent — and costly — than most homeowners believe. For example, some of the nation’s most destructive earthquakes in the last 200 years were centered in the Midwest, not California.

Hurricane coverage is tricky — you may find that you are covered for high winds, but not for flood. Check with your agent.

In areas where earthquakes are rare, insurance is usually available for under $50 a year with deductibles of $200. Premiums and deductibles rise fast, however, in areas where earthquakes are frequent.

Big mistake: Believing that coverage for rain damage will automatically reimburse you, say, if the back porch collapses after a two-day downpour. In fact, the insurers might argue that this type of damage is the result of a flood and not of the rain itself.

Safeguard: Even if you don’t live in a flood-prone area, consider flood insurance.

Information: Federal Emergency Management Agency(800-480-2520).

Premiums vary widely, from a few hundred to a few thousand dollars a year, depending on the location of a house, its age and type of construction.

TRAP #5: THE WRONG DEDUCTIBLE

As you compare prices, it might seem that policies with a zero deductible or a very low one are the way to go. The additional cost of a low-deductible policy in some cases wouldn’t even be as high as repairing one broken window caused by a kid who carelessly throws a baseball.

Pitfall: Home owners with low-deductible policies often file a claim each time there’s the slightest damage to the house or its contents.

Result: The insurance company will hike premiums — and may even cancel the policy.

Safeguards: Opt for coverage with the highest deductible you can afford. You’ll save a bit on premiums — perhaps 5% to 10%. Even more important, you’ll make fewer claims, and this will help keep your rates from rising in the future.

Order a copy of your CLUE report, the database that lists the claims history of home owners, from ChoicePoint Asset Co. (866-527-2600). Insurers use this information in calculating your premiums. Federal law entitles consumers to one free report every 12 months.

If there’s an error in the report, federal law also provides a procedure for home owners to correct it. Contact ChoicePoint Asset for an explanation of the procedure.

Data in CLUE reports are maintained for five years. If you can’t escape high premiums because of your claims history, cut down on filing new claims until your records expire. Then ask for new quotes. It’s likely that they will be lower.

TRAP #6: IGNORING SAFETY DEVICES

Ask your insurance company or agent what home devices can reduce premiums. Most insurers offer lower rates for houses with working smoke detectors, carbon monoxide detectors, fire extinguishers, burglar alarms that automatically notify authorities and sprinkler systems that fight fires.

Installing safety devices can cut premiums by 5% to 15%.

My thoughts: We live near a river and, while we’re not in a flood zone, we went ahead and purchased flood insurance until we had a chance to see a couple of floods and judge the true level of risk. We’re now confident that we really are out of danger, and we therefore decided to cancel the policy. But it was well worth it at first, at least with regard to the peace of mind that it provided. When it comes to deductibles, ours is relatively high. We’re not going to claim relatively low dollar amounts, so why should we carry a low premium? This really boils down to my #1 rule of insurance: Insure that which you cannot afford. Finally, the costs savings afforded by safety devices is one area in which a home alarm system can prove to be valuable (although the discounts don’t typically offset the costs of monitoring).

See also: Avoid Costly Home Insurance Mistakes, Part 1

[Source: Bottom Line/Tomorrow]

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I just ran across an interesting article by Kitty Werner on avoiding costly home insurance mistakes, and I thought I’d share it with you. The article outlines six major traps to look out for, and I’ll cover the first three here…

In short, Werner argues that you could save hundreds of dollars per year on home insurance, and perhaps many thousands of dollars in the event of a serious mishap, if you just take a few simple precautions.

TRAP #1: THE WRONG VALUE

Most home insurance policies state the maximum amount that the company will pay to rebuild a house in the event it’s destroyed. All too often, however, that amount is less than it would actually cost.

The problem typically occurs because an old policy hasn’t been updated to reflect today’s reconstruction cost.

Safeguard: Ask local real estate agents and contractors how much it would cost to rebuild your house. (This cost is less than the sales price. Don’t include the land and foundation, which can withstand most disasters.)

Then check to see whether your insurance policy is written so that it will pay the actual reconstruction cost. If it isn’t, ask your insurance agent to amend the policy.

Some insurance companies may refuse to raise the ceiling on the full replacement value. You may want to shop around for another carrier.

Be careful, however, not to let an agent talk you into a policy that states a higher value for your house than it would cost to rebuild. That boosts your premium unnecessarily because the insurance company won’t pay more than the actual reconstruction cost.

TRAP #2: THE WRONG INSURER

Though overall insurance rates are rising, the ability to make easy comparisons of coverage has encouraged competition among insurers, resulting in a wide variation in premiums and a growing number of companies to choose from.

Unfortunately, not all of these companies are reliable.

Safeguard: Before buying a policy, check out the insurer with your state’s agency that oversees the insurance business.

Many states have consumer-friendly agencies that are eager to tell residents about the financial and claims-paying history of insurers. Some agencies have Web sites where this information is also available. To find your state’s agency, check your state’s Web site.

You can also check out the financial soundness of insurers through Weiss Ratings (800-289-9222). Price per company report: $14.99 on the web, $19 by phone.

Insurers are rated on criteria that include financial stability and the number of customer complaints against them. A company is then given a grade of A for “excellent,” B for “good,” C for “fair” or D for “weak.”

Choose a company that has at least a B rating.

TRAP #3: HASTY COMPARISONS

Instead of comparing only homeowner’s policies, ask for quotes on your total insurance needs, including auto insurance for all members of the household and business insurance if you have your own company.

Most insurance companies give reductions of 5% to 15% to customers who buy what they call “multiline” policies.

My thoughts: We have replacement value coverage on our house. And while it’s tempting to over-insure ‘just to be on the safe side,’ it really is a waste of money. Also, keep in mind that you only need to insure the value of the structure (plus contents, as necessary) — there is no need to include value of the lot when figuring how much to insure you home for. After all, the land will still be there when it comes time to rebuild. As far as the quality of your company goes, we’ve always gone with a major insurer (State Farm) where we have all of our policies. We’ve shopped around a bit but, with all of the multi-line, claim-free, etc. discounts that we’re getting, it just doesn’t make sense to switch, especially if we would be switching to a less reputable insurer. That being said, it’s always good advice to check around and make sure you’re getting the best deal available. We recently did this when we replaced our term life insurance policies, and it worked out quite well for us.

See also: Avoid Costly Home Insurance Mistakes, Part 2

[Source: Bottom Line/Tomorrow]

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This past fall we replaced our term life insurance policies with new policies from Lincoln Financial. Earlier in the year we had received a letter from John Hancock warning us that the credit card that they had on file for our automatic renewal had expired, and that they wouldn’t be able to renew our policies unless we sent them an updated expiration date. No problem, I thought… We don’t want to renew anyway. Wrong.

Instead of letting our policies lapse, they went ahead and charged our credit card despite the fact that the expiration date that they had on file had passed. (Point of clarification… The credit card account was still open, but the expiration date that they had on file for our cards had passed.) So my wife and I now have two term life insurance policies apiece. Needless to say, I wasn’t happy when I discovered this, so I sprang into action. First, I contested the charges with Chase (the card issuer). I’m not sure how that will pan out, but I didn’t want to let this slide indefinitely while we waited for a response from John Hancock. My wife and I then dashed off a pair of letters to John Hancock explaining the situation and asking that they cancel our policies as of the renewal date, such that we get a full refund of this year’s premiums. Again, I’m not sure how this will work out — I’m guessing that they’ll try to give us a prorated refund instead.

In retrospect, this was my own stupid fault. It would’ve been easy to follow up with John Hancock and officially cancel our policies before the renewal date rather than taking them at their word. But I didn’t. So now I get to take care of it the hard way. Hopefully this won’t end up being too much trouble.

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Related Articles at fivecentnickel.com:

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Upon returning home from our vacation last week, we were greeted by a ’seriously overdue’ medical bill stemming from one of my kids’ visits to the doctor a few months ago. Somehow this bill managed to slip through the cracks, and we were probably about a week away from having a $6.50 charge sent out for collection. What a bummer that would have been. Anyway, I called the business office this morning and got everything taken care of. The frustrating thing is that this bill was from the same medical center where I had my wisdom teeth extracted, and they’ve been sitting on close to $700 of ours for the past seven months. But can I send their debt out for collection? No, of course not. I had to fight with them for months before they relented, and I’m now still waiting for the refund check. Very frustrating — and because they bill for each patient separately, rather than having a single account for our family, this charge didn’t just go against the credit that I’ve had on my account.

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At long last… I had my wisdom teeth out back in April and, at the time, Cigna (my dental insurer) refused to cover the extractions. While our dental insurance isn’t great, this was a major disappointment — the oral surgeon’s bill was close to $1300. Had the extractions been covered, our co-pay would have been about half this amount, so… I went ahead and appealed Cigna’s decision. In mid-July, I received the welcome news that they’d changed their mind — they were now willing to cover the extractions. And so began a protracted battle between the oral surgeon’s office, Cigna, and little old me.

Given all of the problems that I had in getting the two on the same page, I have to hand it to Cigna. They were far less problematic than the oral surgeon’s office, who seemed to fight me every step of the way. Anyway, by the time I got: (1) my teeth out, (2) the appeal approved, (3) the oral surgeon to bill Cigna, (4) Cigna to make their payment, and (5) the oral surgeon to apply the payment properly, and to write off the appropriate amounts such that we’d actually get what they owe us, just under seven months had passed! During this time, I made innumerable phone calls and spent countless hours (yes, hours) getting this all straightened out, but… We’re now due a refund of just over $660. Assuming that the check actually shows up in 3-4 weeks as promised, this will soon be a distant (albeit dismal) memory. I can only imagine the number of people that don’t have either the time or the inclination to sort out things like this, and end up getting ripped off in the process.

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