Specialty insurance can be a much better deal than a traditional homeowner's policy if you are a collector or own hard-to-value items. If you collect stamps, coins, guns or jewelry, or own a classic or unusual car, consider asking a knowledgeable agent to help you find a specialty insurer to cover those items. Be sure the company has at least an A rating from A.M. Best (www.ambest.com), and read the policy carefully so you know what is and is not covered under specific circumstances.
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To cut auto insurance costs: Take the highest deductible you can afford. A $1,000 deductible may reduce the cost of collision and comprehensive insurance by as much as 40%...Drop collision and comprehensive coverage when the value of a car is less than 10 times the premium.
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As residents of the Gulf Coast learned-in a tragic way-homeowner's insurance does not cover flood damage.* Trap: Even if your house is above sea level and seemingly out of harm's way, you can be a flood victim. According to the Federal Emergency Management Agency (FEMA), about 25% of all flood claims come from outside high-flood-risk areas...
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Retirees with a traditional defined-benefit plan usually have a choice of distribution options-"single life option" or "joint & survivor option." The first pays more per month, but only during your lifetime-your spouse gets nothing after you die. The second pays less but continues to pay as long as you or your spouse is alive.
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Buy too little insurance, and a mishap could drain away your savings. Buy too much, and you'll pay excessive premiums for years. But how much auto, homeowner's, life and disability insurance do you really need? Use these guidelines to figure it out...
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If you don't have health insurance-because of a layoff or other job change, a divorce or a pre-existing medical condition-don't give up. Efforts to expand health insurance coverage reportedly are becoming quite common. This year alone, proposals have been introduced in at least 19 states, including California and Minnesota. Illinois has approved a plan to offer low-cost health insurance to children beginning July 1, 2006.Even under current law, it is possible to find coverage for you and your family, usually at a reasonable cost. Options to consider if you need health coverage but are too young (under age 65) to qualify for Medicare...COBRA/State plans
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Give away your life insurance policy to save your heirs thousands of dollars in estate taxes. Life insurance proceeds (cash surrender value or death benefit) are considered part of your taxable estate-but if you don't own the policy, proceeds are not taxable. Giving the policy to your spouse is not usually a good idea-if he/she dies first, the proceeds become part of his estate and the problem remains. If you have adult children, give them the policy. You must report any policy value above $11,000 per recipient for gift tax purposes, since $11,000 per year is the most anyone can give anyone else tax-free ($12,000 in 2006), but the policy's eventual proceeds will not be taxed.
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When you buy term life insurance, make sure you can convert it to permanent insurance without having to prove good health, suggests insurance adviser Lee Slavutin, MD. Also look for the ability to convert all or part of the policy to any type of permanent life insurance-including whole, universal or variable-at any time during the life of the policy.
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Insurance marketers are creative geniuses when it comes to thinking up policies to pitch to consumers. Here is the lowdown on some newer types-and if they are worthwhile...
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Life insurance for people who have chronic health problems, such as diabetes or heart disease, can cost two or three times as much as insurance for those in excellent health, warns consultant Glenn Daily. For people with serious conditions, such as cancer and AIDS, it might be impossible to buy insurance.
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Update insurance coverage levels on your home.
Homeowners' insurance policies traditionally paid whatever was necessary to rebuild a damaged home but the law requires that the face value of a policy equal at least 80% of actual replacement cost.
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Drop collision insurance when your car's value is less than 10 times the annual insurance premium and damage from an accident may cost as much to fix as the car is worth. Put the money you save in a special account to cover any collision-related repairs.
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Many drivers overpay for liability insurance - by as much as 15%.
Reason: Most insurers set liability rates without regard to the type of vehicle. Sport-utility vehicles (SUVs) and pickup trucks do more harm to vehicle occupants in collisions, but their drivers are not charged higher rates. Instead, all drivers pay more, in effect subsidizing insurance for SUV and pickup drivers.
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Disability insurance basics: Buy your own policy - benefits are taxable when your employer buys it for you. Cover 60% of your income - not 100% - since no taxes would be due on the benefits. Good policies define disability as the inability to perform the material and substantial duties of your own occupation. The policy should be non-cancelable, expandable to rise with your income, and protected from inflation.
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Appeal a denied emergency room claim through your HMO's appeals process and you have a good chance of winning.
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Higher deductibles for health insurance may become more attractive as the cost of traditional health plans continues to soar.
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Your health insurer may try to change your prescription to a less expensive one - but you don't have to do it, says attorney Rhonda D. Orin. Thanks to a government settlement with benefit manager Medco Health Solutions, similar firms are likely to give patients the right to continue with their original prescription drugs.
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Consider switching from life insurance to long-term-care insurance. In a two-income family with children out of college and a paid-for home, life insurance - which replaces the income of one spouse - may not be needed.
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Giving a teen an older car and having him/her take out insurance on it may cost less than placing him on the family's policy as a driver of the family's other cars. Ask your insurer if the teen then can have access to other family cars as well. Insurers view older, less-expensive cars as lower-risk, so rates tend to be low. You may need less collision and comprehensive coverage on an old car than on a newer one.
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