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  • More on Social Security Disability

    When I was filling in for JLP at All Financial Matters last week, I discussed Social Security Disability benefits and they actually sounded pretty good. But it looks like they might be rather difficult to get. Beachgirl just shared that her dad, who hasn’t been able to work for some time now, was just denied disability benefits. And from what I can gather, he’s not able to work at all.

    It would be one thing if the Social Security Administration’s letter said that since he still has cognitive abilities, he could find a different job. But if I’m reading the portion she posted correctly, they’re saying that they think he could still do his job as a maintenance worker. Huh?

    Fortunately, her parents have consulted an attorney, who believes they have an excellent chance of winning an appeal. I hope he’s right!

    Are college students covered by their parents’ insurance policies?

    If you’ve got a child headed off to college in the fall, it’s not too early to start looking into their insurance coverage while they’re away. I found a handy little column in the June issue of Westways, so I’ll share what they say:

    • Health insurance – Most health insurance policies cover dependents up to 25 years of age if they’re in school full-time. You’ll want to check your own plan for its specifics, though, and talk with your child about what “full-time” means. (One dropped class could mean no health insurance – yikes!) You should also take a look at what out-of-network costs might be if your child’s school is far away. If your policy doesn’t cover your child, or you’re worried about those out-of-network costs, you can purchase a temporary policy – I seem to recall my schools always offered one, though I never bought it (they always seemed a little shady to me – maybe they were actually catastrophic policies? – so make sure you read the fine print).
    • Property insurance – If you can still claim your child as a dependent, she will most likely be deemed part of your household and her possessions will be covered under your homeowner’s policy while she’s away at school. But the coverage might be limited, so check your policy and decide whether renter’s insurance might be a better bet. In this situation, I would probably call up my insurance agent for guidance.

    One final note: If you’re bearing any kind of responsibility for your child’s college education, you may want to make sure your life insurance coverage is adequate. It’s occurred to me that our very first term policies will expire just as our oldest heads off to college, and the polices that we acquired shortly after his birth will expire while he’s still in school. I expect our finances to be such that we won’t need additional policies at that point, but if we aren’t as financially secure as I hope we’ll be, I’ll consider five-year term policies so that money won’t be a source of stress in the event of the unthinkable.

    Car insurance that works the way it’s supposed to

    Remember that tiny dent that I mentioned our oldest boy put into the car parked next to us a few weeks ago because I wasn’t watching closely enough? Well, the other car’s owner went ahead and called his insurance company, and our insurance agent called us.

    And although I wasn’t looking forward to the call, it wasn’t so bad.

    First of all, I want to say that I love our insurance agent. He’s nice, professional and competent, and he’s also straightforward and helpful.

    With that in mind, he gave me the option of deciding whether to claim the incident on our insurance or handle it ourselves. And he helped me make the decision by giving me all of the information I needed.

    The damage to the other car is $300. Our deductible applies only to damage to our own vehicle, so the insurance company will cover the entire cost. Because the claim is a low amount, it won’t impact our premiums.

    The only thing to be concerned about is the possibility of losing our good driver discount if there’s another incident in the next three years. (The discount is $80 per year.) Hopefully, that won’t be something we have to think about again, though!

    One thing I wish I could find out is what the other car’s owner thought about before he filed his claim with his insurance company. He did absolutely nothing wrong (both our cars were parked within the lines) so it seems like the claim shouldn’t impact his policy at all. And since we’ll pay for the damage, his insurance company isn’t out any money either. But I’ve read that multiple small claims can result in higher premiums – although this could apply only to home insurance policies, since there will rarely be a responsible third-party to absorb the cost of those claims. Hm, does anybody know?

    All in all, I’m really pleased that our car insurance policy seems to be doing exactly what it’s supposed to do, even in a very minor incident!

    10 Tips for Minimizing Life Insurance Costs

    After my friend’s husband died last week, I wrote about figuring out how much life insurance you need and what kind of policy you should get. Since I’ve hopefully spurred at least some of you to get new policies if you need them, I figured I’d better share some tips for saving money on your premiums:

    1. Buy term. – It’s much more affordable than whole life. (But find out why you may want or need a whole life policy.)
    2. Shop around. – While you want to make sure you get coverage with a reputable company that’s going to be around for the full duration of your policy, you also want to get the best deal. Different insurers charge different premiums. One possible easy way of comparing prices might be to work with an independent insurance agent. Some “independent” agents work almost exclusively with only one or two companies, so be sure to ask for quotes from several insurers.
    3. Check with your employer and/or union. Your employer or union may automatically provide you with a policy, or at least offer a reasonably priced policy that you can purchase. While you don’t want to assume that it’s the best policy for you, it’s definitely worth looking into. If this policy is relatively inexpensive up to a certain amount, you could always use it in combination with other life insurance policies.
    4. Pay your premium annually. – The more payments you make each year, the more convenience fees the insurer probably charges. The best thing about this tip is that it’s one you can take advantage of even after you’ve purchased your policy.
    5. Be in (or get in) good health. – This is rather obvious, but healthy people pay lower premiums. While you can’t do anything about your family’s medical history, you can make sure that you are a healthy weight, and keep your cholesterol and blood pressure at a healthy level.
    6. If you smoke, quit. – Enough said.
    7. Don’t engage in overly risky activities. – For instance, if you skydive, fly private planes, or have a dangerous job, your premiums will be higher.
    8. Consider giving plenty of details to the insurer’s representative who questions you. – “Have you seen a therapist?” is apparently as standard question, and I have had to disclose that I have. But I explained that it was to help me work through the grief of two miscarriages. I also explained that my dramatic weight gain and loss was due to pregnancy. I don’t know if these explanations made a difference, but they certainly didn’t hurt – I was classified in the lowest risk category.
    9. Find out if rates are lower for multiples of $250,000 of coverage. – For example, $500,000 of coverage might cost the same or less than $450,000 of coverage.
    10. Don’t buy more than you need. – Unless it costs less, of course, as in Tip #9. While I emphasized that it’s important to have enough, you’ll just be throwing money away if you buy too much insurance.

    Going against the grain: When to get a whole life insurance policy

    Let me start this article off by noting that I am by no means an expert on life insurance. What I state here is simply my own opinion, based on what I’ve read and learned over the years. Always do your own research and make your own informed decision based on what is best for you and your family.

    As I mentioned the other day, I’ve been thinking about life insurance since my friend lost her husband. They have two young boys also, so her loss has really got me wanting to make sure we’ve done everything we can to prepare for the unthinkable in case it happens. Because sometimes it does.

    I’ve already discussed how to figure out how much life insurance you need, but I didn’t really talk about the difference between term and whole life insurance.

    Term insurance is very simple to understand. Your policy is for a set term (usually between 10 and 30 years). You pay a monthly or annual premium that’s based on your age, gender, health, and personal and family medical history at the time you obtained the policy.

    Whole life insurance is a little more complicated. The policy isn’t for a set term but rather it’s for the rest of your life. Partly because of that, the premium is considerably higher than the premium for a term policy. But (and here’s where things start to get confusing for me), unlike with term insurance, part of the premium of a whole life insurance policy goes toward an investment component. Generally, the return on the investment portion of a whole life policy is such that it’s not considered a good investment, i.e., you could get a better return on your money elsewhere.

    There are other types of life insurance also – universal and variable – which are similar to whole life in that they also have an investment component (and these are all often grouped together as “whole life”). The differences between these types are related to the investment component, i.e., what types of investments are available.

    So how do you know if you should get term or whole life insurance?

    Generally, you always want to go with term. It’s much more affordable and it’s all most people need.

    But there are times when you need life insurance for your entire life. For example, if you have a disabled dependent who may outlive you but will be unable to support herself, you may want to consider a whole life policy.

    If you think you’ll need some life insurance but not that much when you are older, you can purchase a small whole life policy and get the rest of your coverage as a term policy. The advantage of doing this is that the premium on the whole life policy will be significantly lower than if you wait to get a new policy when your term policies expire. And if you keep your whole life policy for 20 or more years, eventually you will end up with a pretty good cash value in the investment portion of the policy. (Although some experts would recommend that you simply invest the money you would have paid toward the premium instead.)

    If you decide a whole life policy is right for you, you still have other decisions to make. Within whole life policies, there are variables that I don’t quite understand that need to be taken into account. You’ll probably want to talk to an expert to help you decide exactly what kind of policy is best for you.

    If you want to learn more about whole life insurance, check out the following articles: