Monthly Archives: July 2013

Most Common Car Insurance Myths

    Car insurance is one of the most significant expenses that are involved in owning a car. Depending on the car’s make, model and year, your credit history and driving record, insuring your car may cost you up to $1,000 – $1,500 a year. Calculating insurance costs can be a bit complicated, and a lot of car owners don’t understand their policies and what is covered by them. In addition to this, there is plenty of inaccurate information circling around, especially on the Internet, mostly regarding rates and coverages, that create myths and misconceptions about car insurance, and make it sound even more complicated than it actually is. The following is a list of some of the most common car insurance myths.

A Car’s Color Affects Insurance Rates

A lot of people believe that a car’s color is a factor that is used by insurance companies when determining your premiums. The myth says that there are certain colors, especially red, that can make your rates go up, but it’s simply not true, so you can choose whatever color you like, it won’t impact your rates. The color of your car has nothing to do with safety, and it doesn’t increase or decrease the risk of car accidents, so it doesn’t matter whether your car is bright red, blue, white or black, it’s all the same to insurance companies.

 Filing a Claim Always Raises Your Rates

While this can be true in some cases, it doesn’t necessarily mean that whenever you make a claim, your rates will go up. The claim itself doesn’t affect your rates. It depends on how serious the incident is, whether the accident was caused by you or another driver, and your driving history.

 Everything is Covered by Comprehensive Coverage

Despite its name, comprehensive coverage doesn’t cover everything. There are certain things that are not included in this type of coverage, such as towing and roadside assistance. Also, it doesn’t cover you in case your personal property is stolen from your car, and it doesn’t pay for damages that are result of a collision.

 If Your Car Is Totaled, Your Insurance Company Will Pay Off Your Loan

In case your car is declared “a total loss”, your insurer will only pay the actual cash value of it. If your loan hasn’t been paid off before your car got totaled, you will have to pay it off out of your own pocket. The only way to be protected in this sort of situation is to buy gap insurance.

 Your Insurance Follows You No Matter What Car You Drive

Car insurance follows the car, not the driver, which is what a lot of people believe. If you drive someone else’s car, and you get into an accident, damages will be covered by their insurance, not yours. No matter what type of insurance you have purchased, you have to remember that it only applies to your car, and it doesn’t transfer to other cars that you drive.

Author bio:

Jordan Perch is an automotive fanatic and “green cars” specialist. He is an author of many how-to articles related to safe driving, green technologies, auto insurance etc. Currently blogging for DMV.com.

How Much Life Insurance is Too Much?

   Financial decisions are more challenging when the monthly budget is strained to cover ongoing demands and rising prices. Incomes are not growing at the appropriate rate to cover inflation, so household managers have to make difficult choices. The cost of life insurance arises when someone asks, “How much life insurance is too much?” Major categories must be assessed to determine if the current life situation matches the life insurance coverage.

Family Situation

Life insurance policies are designed to provide funds that would replace the income of the person who dies prematurely. Wage earners must consider the possibility that the family will have to continue to live without the source of income. In some situations, financial advisors will recommend that life insurance amounts be decreased.

  • Unmarried/No Dependents – Most people who do not claim any additional dependents on their tax return would not need life insurance. Minimal life insurance for final expenses might be prudent to offset expenses that must be paid by the extended family. A single person with a mortgaged property that is to be left to someone through a will should consider sufficient life insurance to repay the debt in full.

  • Married with children – A person with multiple dependents would need sufficient life insurance to replace the annual income for three to five years. Millions of dollars in life insurance would be considered exorbitant because of the annual premiums that must be paid.

  • Divorced with children – Every situation is unique when a family lives apart. The parent paying child support and alimony must consider the importance of sustaining this support if the unthinkable should happen. In the case of remarriage, the individual should consider multiple policies with designated beneficiaries.

  • Aging parents – Adult children with financial and care-giving responsibilities for aging parents must consider carrying life insurance that would provide for their needs. After both parents have passed away, the life insurance amount should be changed to cover the family.

Personal Financial Situation

Financial choices throughout the working years will determine how much life insurance coverage is prudent. Large sums of life insurance might not be necessary. Life insurance coverage can offset significant financial obligations.

  • Multiple income streams – Stocks, bonds and other investments can be used to create an income stream that would support the family if the primary wage earner dies. Life insurance policies become less important in this situation.

  • Outstanding debts – Home mortgages and other debts can be repaid in full using the life insurance proceeds. After repaying the debts, the life insurance policies designated for this purpose should be cancelled.

  • Business obligations – Owners and principles in a business interest must be covered with sufficient life insurance coverage to pay for the legal expertise to transfer ownership of the business. After the sale of a business, this life insurance coverage can be cancelled.

  • Large estate – In various locations, estate taxes can be high enough to cause the family to sell assets to pay the tax bills. Large life insurance policies can be purchased to transfer the wealth to the next generation without paying estate taxes. In this case, the assets are sold while the life insurance proceeds are kept.

Stage of Life

Wage earners know that each stage of life presents financial obligations that become progressively more expensive. Life insurance coverage must be adjusted to sustain the family’s dreams if the wage earner passes away prematurely. Decisions concerning coverage levels must be current without anticipating future needs.

  • Young children – Few young parents enjoy life insurance discussions. Young families can suffer devastating financial setbacks if both parents are uninsured. The financial stability of the family requires sufficient life insurance.

  • College students – Anyone with young people in college knows that their dreams depend on a steady stream of funds for education. Once the college years are completed, the life insurance coverage must be re-evaluated.

  • Empty nest – Life insurance takes on new meaning for the older couple that no longer has a family to support. Other income streams must be considered when determining how much life insurance is necessary.

  • Approaching retirement – A house without a mortgage, comfortable lifestyle from various investments and children in good jobs add up to a retirement that does not require significant life insurance coverage. At this point, the final expenses should be covered through the life insurance proceeds.

So, now you know how much is too much when planning to buy a life insurance. Stages of life end at regular intervals as the family ages, and careers come and go. Wise financial decisions include annual reviews when life insurance needs are also re-assessed. It’s the cost of annual life insurance premiums that will dictate the need to reduce the amount of life insurance coverage. And it’ll only happen if people know they have too much life insurance when a significant life event occurs.

Brian Johnson is a Blogger with Select Quote, a leading provider of term life insurance. The website contains a range of resources for consumers to learn the ins and outs of insurance, including types of insurance, rates, and estimates for how much insurance consumers typically need based on their lifestyle

Why Life Insurance?

    Life insurance is a necessity that too many people in society today ignore.  Sure, there are those who signed up for life insurance through their employer’s benefits, but this only carries while they are employed by that company.  The need to have a personal policy that stays with you, regardless of employment, is critical, especially for those with families or credit-based assets such as a home or business. Life insurance is not to take care of you, necessarily, but to see to those that are left behind.

Term life insurance is the most popular for most people.  It allows an individual to set the amount, the “term” or length, and is usually based on age and physical condition (though there are other factors used by most insurance companies when rating a potential client).  Many home buyers are required or requested to purchase a type of term policy known as Mortgage insurance.  The difference between term and mortgage is that term pays to the individual’s named beneficiary, and the mortgage policy pays to the lender in time of death to satisfy the loan on the home.  The latter gives protection to the decedent’s family knowing that their home is safe.  The term policy can do this, and much more.

A term policy is usually bought to ensure that anything needed for the individual’s family when they die can be taken care of.  This means that the house can get paid off, the children can go to college, any unpaid debts can be cleared, the survivors will not have to worry about bills or income for a period of time, and even can pay for the funeral of the decedent. In some cases, financial advisors may recommend this type of policy to individuals who need estate protection upon their death.

Term policies are also very good advice for small business owners, whether they are incorporated, partners, or even sole proprietors.  Having a dedicated term policy in this instance can ensure that the business will still move forward and stay in operation while management and ownership changes are made.  The small business owner needs to look at his or her work, and realize that their efforts should not die with them. Some companies, especially if they are financed, are required to have a insurance policy for protection of the entity.

Another kind of life insurance to think about is whole life insurance.  This is essentially life insurance that encompasses your whole life from the first day it is administered to the day that you die or hit 101.  Typically this type of insurance is a bit more pricey, but it does last your whole life giving you a guarantee issue of the total amount of the policy upon death. It is advisable to get different life insurance policy quotes.  It is these types of policies that can be used for funeral expenses, hospital bills or an inheritance for the remaining benefactors.

Life insurance is an important thing to consider.  It can leave a lasting legacy of your life, knowing that you thought enough in advance to take care of your family, relatives, or friends if you are no longer around.