Six Questions To Ask Before Buying A Life Insurance Policy

I.I.I. Recognizes Life Insurance Awareness Month, A Reminder Of The Importance Of Proper Coverage

Before buying a life insurance policy there are some important questions you should consider, and discuss with your insurance agent or company representative, according to the Insurance Information Institute (I.I.I.).

The benefits of a life insurance policy are clear: the coverage provides financial protection against the death of a policyholder in the form of a payment to the beneficiary; and life insurance proceeds are not taxable income. However, it is important that you find the policy that best fits your situation. In recognition of Life Insurance Awareness Month, here are six key questions to help you make the right choice.

1. Do I need to buy a life insurance policy?
   If you and your spouse or partner have made financial commitments that rely on the continuation of your income, a life insurance policy is the most cost-effective way to provide the benefits your survivors would need. The proceeds from a life insurance policy also enables your estate to pay what it owes after your death, or fund a post-death gift to your beneficiaries.
   
   
2. Won’t the life insurance benefits I receive from my employer be enough?
   Maybe, but probably not. Group life insurance policies—often offered to employees by their employers—generally pay out a dollar amount equal to one year of the employee’s salary, much less than what your survivors would need over time.
   
   
3. Can I count on my survivors getting Social Security benefits?
   U.S. Social Security survivor benefits are available only if the surviving spouse has dependent children under the age of 18, or if the surviving spouse is aged 60 or over, so there may be a lengthy period where, in fact, he or she would not receive any benefits at all. Even when children and spouses are eligible for Social Security survivor benefits, the federal government caps them at a “family maximum,” which is likely to fall far short of what the survivors need.
   
   
4. How can I figure out how much life insurance coverage I need?
   Try to identify how much money your survivors will need for as long a time period as they will need it, and buy enough insurance to meet this dollar amount. Some people like to use a shortcut, such as a multiple of their current annual income, when deciding how much the face value of their life insurance policy should be. If you use this method, remember that your income is likely to increase over time, while the life insurance benefit is often a fixed amount, such as $100,000 or $500,000. In other words, a death benefit bought today as a multiple of your current income will be a smaller multiple of future income. Moreover, life insurance industry research has shown that most survivors struggled to meet their financial commitments when the life insurance policy proceeds they received were equal to three times the policyholder’s annual income, or less. If you use a multiple-of-income shortcut, consider buying a life insurance policy with a face value equal to at least 10 times your annual income.
   
   
5. Should I purchase a term or permanent life policy?
   Term insurance is a form of life insurance that pays out only if the policyholder’s death occurs during the “term” of the policy, which is usually anywhere from one to 30 years. The premium rates for term policies are lower than for permanent life policies. Permanent policies, such as whole life, universal life, variable life and variable universal life, remain in force as long as the premium is paid, and some policies accumulate a cash value.
   
   
6. How can I save money on life insurance?
   Life insurance premium rates, especially for term life policies, are now at virtually their lowest levels in history. However, there are a number of things you can do to keep the cost even lower, whether you are purchasing a term or permanent life insurance policy. For example, buy policies with face-value amounts that reflect “quantity discounts.” It’s possible that a $500,000 life insurance policy will cost less than one valued at $450,000 because the larger policy might offer a discount for reaching the $500,000 milestone. You can also save by paying premiums annually, rather than on a monthly, or quarterly, basis.
   
   But the most important question to ask about price is: how much will it cost your survivors if you do not pay the premium at all?

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Do You Have Earthquake Insurance?

Contrary to popular belief, many homeowners do not have earthquake coverage. While, some may not believe it to be necessary, the recent earthquake which reached many locations in Kentucky is an eye-opener. What would you do if your home was destroyed due to an earthquake but had no issuance to cover it? Could you repair or rebuild?

Get the Facts on Earthquake Insurance

What you don't know can hurt you. For example, your basic homeowners policy doesn't cover damage, and if even if you do have the coverage on your policy the earthquake deductible is probably higher than you think.

Possibly the most important thing to know about earthquake insurance is this: A basic homeowners policy does not cover earthquakedamage. Even if you don't live in an area where earthquakes are common, it's possible you might need earthquake insurance.

Earthquakes have occurred in 39 states since 1900, and about 90% of Americans live in areas considered seismically active. Yet only a small percentage of people purchase earthquake insurance.

Even in California, where earthquake fears are a daily fact of life, only about 12 percent of homeowners have earthquake insurance, according to the California Earthquake Authority (CEA), down from 30 percent in 1996 when the state legislature created the CEA.

Each year, more homeowners get rid of earthquake coverage than buy it because, according to consumer groups, they believe the policies cost too much and cover too little.

According to the U.S. Geological Survey, there is a 70 percent probability that one or more damaging earthquakes of magnitude 6.7 or larger will strike the San Francisco Bay area during the next 30 years. (A magnitude 6.7 earthquake is equivalent to the 1994 Northridge, Calif., earthquake that killed 57 people and caused $20 billion worth of damage.)

Homeowner, condo and rental insurance policies do not cover damage caused by an earthquake, but coverage can be puchased as an endorsement or a separate policy. Earthquake insurance can be quite inexpensive depending on where you live. Contact your insurance agent or company to find out what the costs would be for your home.

Not surprisingly, Californians buy the most earthquake insurance, but earthquake insurance has been sold to residents of all 50 states.

The Earthquake Education Center at Charleston Southern University claims there's a 40 to 60 percent chance of a major earthquake somewhere in the eastern United States in the next 20 years. That has prompted the South Carolina Insurance News Service to recommend residents of that state consider purchasing earthquake policies.

The New Madrid Fault, which runs through Arkansas, Kentucky, Missouri and Tennessee, also has insurers worried. According to the Insurance Information Institute, there's a 40 to 63 percent chance the region will suffer an earthquake with a 6.0 magnitude in the next 15 years. The availability of earthquake coverage has become an issue in some regions of those states. For those who don't remember, which would include anyone not alive in 1811, an earthquake struck the New Madrid area with enough force to change the course of the Mississippi river and ring church bells on the east coast.

"The potential magnitude of a catastrophic New Madrid quake dictates that we approach the preparedness on a regional basis," says W.R. Padgett, board chairman of the Central United States Earthquake Consortium. "No one state can possibly begin to address all the issues."

What does earthquake insurance cover?
Ideally, your earthquake insurance policy covers the cost to replace or repair your damaged property. There are several options to consider when picking a plan, including:

Does the policy cover only the dwelling? Are accessory structures, such as garages, also included?

Will your policy pay for the contents of your home and for additional living expenses if your home is badly damaged or destroyed?

Are there any exclusions or limitations to coverage?

What deductible must you pay before the insurance kicks in?

How much does earthquake insurance cost?
Earthquake insurance rates are determined differently by each insurance company and can vary widely depending on several rating factors.

Generally, older homes cost more to insure than new homes. Wood homes get better rates than brick ones because wood tends to withstand quake stresses better.

In addition, areas are graded on a scale of 1 to 5 for likelihood of quakes, and this might be reflected in earthquake insurance rates. Because earthquake insurance is a type of catastrophic coverage, most policies carry a high deductible — anywhere from 2 to 20 percent of your replacement coverage limit.

For residents of California, one option is to get insurance through the CEA. The CEA is a state-sponsored private-public partnership providing earthquake insurance to California homeowners, renters and condominium owners. Insurance companies that belong to CEA offer a standard earthquake insurance policy with a 15 percent deductible. There's also a 10 percent deductible policy available. The CEA Web site has a tool to calculate your estimated annual earthquake premium. Californians can also buy earthquake policies outside the CEA.

How much coverage should I buy?
If you ultimately decide to purchase earthquake insurance, remember you should buy enough to cover the costs of rebuilding your house and replacing broken possessions. The amount of insurance you buy should be based on replacement and reconstruction costs, not the market value of your property and possessions.

You should also find out your rights for filing claims before you sign any earthquake insurance policy. It's important to know how much time you have to file a claim following a quake. In some cases, damage from earthquakes is not immediately apparent.

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Before Taking a Dip In The Swimming Pool, Consider the Insurance and Safety Implications

A Few Precautions Can Help Prevent Accidental Injury or Drowning and Protect You Financially, Says the I.I.I.

With temperatures soaring throughout the country, many people will be taking advantage of the heat-beating enjoyment of a swimming pool. Whether you have a luxury in-ground pool or plan to blow up an inflatable kiddie pool, it is important to consider the insurance and safety implications, according to the Insurance Information Institute (I.I.I).

Swimming pools are more popular than ever before. An estimated 8.8 million swimming pools are in residential or public use in the United States today, according to the Centers for Disease Control and Prevention (CDC).

“Pools offer a great way to keep cool in this heat and humidity, but they can also be dangerous,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “A child can drown in a few inches of water in less than 30 seconds.”

Indeed, there are over 3,400 fatal accidental drownings in the U.S. annually, with children ages one to four having the highest drowning rates. Fatal drowning remains the second-leading cause of unintentional injury related death for children ages one to 14 years old, according to the CDC. In addition, for every child who dies from drowning another four children will be treated for “nonfatal submersion injuries” which can cause brain damage that may result in long-term disabilities including memory problems, learning disabilities and permanent loss of basic functioning (e.g. permanent vegetative state).

The I.I.I. suggests taking the following steps if you own or are considering purchasing a swimming pool:

• Call your insurance agent or company representative
  Let your insurance company know that you have a pool or are getting a pool, since it will increase your liability risk. Pools are considered an “attractive nuisance” and it may be advisable to purchase additional liability insurance. Most homeowners policies include a minimum of $100,000 worth of liability protection. Pool owners, however, may want to consider increasing the amount to at least $300,000 or $500,000. You can also talk to your insurance agent or company representative about purchasing an umbrella liability policy. For an additional premium of about $200 to $300 a year, you can get $1 million of liability protection over and above what you have on your home.
  
  “You can be sued if someone drowns or is injured in your pool even if they do not have your permission to be there,” Salvatore warned. “So it’s important to have the proper locks and safety equipment and to have appropriate liability insurance.”
  
  If the pool itself is expensive, you should also have enough insurance protection to replace it in the event it is destroyed by a storm or other disaster. And, don’t forget to include any chairs, tables or other furniture around the pool deck.
• Contact your town or municipality
  Each town will have its own definition of what constitutes a “pool”, often based on its size and the depth of the water. If the pool you are planning to buy meets the definition, then you must comply with local safety standards and building and electrical codes. This may include installing a fence of a certain size, locks, decks and pool safety equipment.

The I.I.I. also recommends taking the following safety precautions:

1. Install a four-sided barrier such as a fence with self-closing gates to completely surround the pool. If the house forms the fourth side of the barrier, install alarms on doors leading to the pool area to prevent children from wandering into the pool or spa unsupervised. In addition to the fences or other barriers required by many towns, consider creating several “layers of protection” around the pool, in other words setting up as many barriers (door alarms, locks and alarmed safety covers) as possible to the pool area.
2. Never leave small children unsupervised—even for a few seconds. And never leave toys or floats in the pool when it is not in use as they may prove to be a deadly temptation for toddlers trying to reach them who might then fall into the pool.
3. Keep children away from pool filters and other mechanical devices as the suction force may injure them or prevent them from surfacing. In case of an emergency, know how to shut off these devices and clearly post this information so others can do so too.
4. Ask if pool users know how to swim. Learners should be accompanied by a good swimmer. If you have children, have them take swimming lessons as early as possible. And, do not allow anyone to swim alone.
5. Check the pool area regularly for glass bottles, toys or other potential accident hazards. Also, keep CD players, radios and other electrical devices away from pools or nearby wet surfaces.
6. Limit alcohol use around the pool, as drinking alcoholic beverages negatively impacts balance, coordination and judgment—and its effects are further heightened by sun exposure and heat. The CDC reports that alcohol use is involved in up to half of adolescent and adult deaths associated with water recreation.
7. Clearly post emergency numbers on the phone, in the event of an accident. Keep a first aid kit, ring buoys and reaching poles near the pool. You may also want to consider learning basic water rescue skills, including first aid and CPR training. For additional information, contact the American Red Cross.

The U.S. Consumer Product Safety Commission has launched Pool Safely, a pool safety campaign that can also be found on Twitter: @poolsafely.

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Driving in Bad Weather

Driving in bad weather is a major cause of accidents. When you are driving, particularly on a long trip, make sure to stay tuned to radio reports about weather conditions. If you hear that an ice storm, hurricane, tornado, flood, hail or other severe weather is expected on the route you are taking or at your intended destination, change your travel plans. Whatever reason you have for going where you are going cannot be as important as saving your life.

If you are already in an area that is being hit by bad weather, don’t try to drive your way out of it. Seek shelter for both you and your car and wait for the storm to pass.

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Prepare For Disasters Before They Happen; Know The Claims Filing Process

Tornadoes, fires, hurricanes—these and other disasters can wreak havoc on people’s lives, properties and possessions. Learning the claims filing process before an insured loss strikes can make your economic recovery faster and easier, according to the Insurance Information Institute (I.I.I.).

“The claims filing process can be overwhelming, particularly if you have sustained a large loss,” said Michael Barry, vice president, Media Relations, I.I.I. “To begin the rebuilding process as quickly as possible, you need to get your claim going and that means contacting your insurance agent or company representative right away,” he added. “Your insurance company may send you a proof of loss form to complete, or an adjuster may first visit your home. In either case, the more information you have about your damaged property and possessions, the faster your claim generally can be settled.”

When a disaster does happen, the I.I.I. offers the following claims filing tips:

1. Be prepared to give your agent or insurance company representative a description of the damage. Your agent will report the loss to your insurance company or to a qualified adjuster who will contact you about making an appointment to inspect the damage. If you have to evacuate, make sure to give your agent or insurer a telephone number where you can be reached.

2. Take photos of the damaged areas. These will assist the adjuster in the investigation and help with the claims process.

3. If you do not already have one, prepare a detailed inventory of all damaged or destroyed personal property. Be sure to make two copies, one for yourself and one for the adjuster. Your list should be as complete as possible, including a description of the items, dates of purchase or approximate age, cost at the time of purchase and estimated replacement cost, if you are able to provide that figure.

4. Collect canceled checks, invoices, receipts or other papers that will assist the adjuster in obtaining the value of the damaged or destroyed property.

5. Make whatever temporary repairs are needed to protect your home from further damage and from causing injury to you and others. Do not make extensive permanent repairs until after the claims adjuster has been to your home and assessed the damage.

6. Save receipts for any supplies or materials purchased, and make copies of bills for your records. Your insurance company will reimburse any reasonable expenses incurred in making temporary repairs. Secure a detailed estimate for permanent repairs to your home from a reliable contractor and give it to the adjuster. The estimate should contain the proposed repairs, costs and replacement prices.

7. The contractor’s bid should include details of the materials to be used and prices on a line-by-line basis.

8. Be sure to keep copies of the lists and other documents you submit to your insurance company. Also keep copies of whatever paperwork your insurance company gives you.


If you believe the settlement offer made by your insurance company is not a fair one, contact the insurer. Be prepared to provide information to back up your claim.

Your settlement probably will not be the same as your neighbor’s. Your insurance policy may be different and the amount of damage to your home may be different even though you live on the same street. Your insurance policy will pay for the property you had before the disaster. But your homeowners insurance policy will not pay for expensive improvements like a tile roof, for instance, if you had a standard fiberglass roof before the insured loss occurred.

Serious losses are given priority. All losses are adjusted and claims paid as quickly as possible but hardship cases are usually handled first. If your home is destroyed or seriously damaged, your agent will do everything possible to assure you are given priority.
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Personal Watercraft

Personal watercraft are not generally covered by homeowners or auto insurance, and where they are, the coverage limits can be fairly low. You may need to purchase a specifically designed policy in order to insure these vessels. The personal watercraft policy covers:


■ Bodily injury
■ Property damage
■ Guest passenger liability
■ Medical payments
■ Theft

Typical policies include deductibles of $250 for property damage, $500 for theft and $1,000 for medical payments, although these may vary from company to company.

Liability limits start at $15,000 and can be increased to $300,000. This coverage will provide financial protection if your personal watercraft is involved in an accident.

Most policies also include water sports liability, which covers risks associated with activities such as waterskiing.

Consider buying an umbrella policy which will provide more liability protection. One million dollars in extra coverage costs about $300 a year and would extend to your home and auto insurance policies.

If you have several personal watercraft, you may qualify for a multi-boat discount on your insurance. Additional coverage can also be purchased for trailers and other accessories.

Be sure to speak with your insurance agent or company representative about your specific needs.



Personal Watercraft Safety

Sea Doos, Wave Runners and other personal watercraft are fun and so easy to use that you can get a false sense of security; however, each year they cause thousands of serious injuries.

To safely enjoy your personal watercraft, the I.I.I. suggests the following:



■ Never follow directly behind another personal watercraft. Stay at least 100 yards behind the vessel in front, and no less than 50 yards to one side. Because these vessels can travel at a very high rate of speed, each rider must be able to react to sudden changes in order to avoid a collision. Eighty percent of all injuries and fatalities occur when two vessels collide with one another.

■ Don’t jump the wake of a passing boat. You could misjudge its speed and cause a collision. Or you might end up in the path of traffic coming from the other direction.

■ Stay alert! Be aware of what is going on around you. Steer clear of other watercraft, swimmers, divers, water skiers and fishermen.



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Lawnmower Safety

Each year, approximately 75,000 people are injured seriously enough by lawnmowers to require emergency room medical treatment. Only a small percentage of the injuries are caused by mechanical failure; most are the result of human error.

Here are some tips to follow before and while mowing your lawn:

Become familiar with your mower. Read the owner’s manual before using the mower for the first time. Note all safety and operating instructions. Learn the controls well enough to act instantly in an emergency and to stop the machine quickly.

Proper clothing is essential to protect your body from harm.Always wear non-slip shoes instead of tennis shoes or sandals. Steel-toe safety footwear offers the most protection against the blade. Long pants help protect your legs from objects that may be thrown from under the mower. Use ear plugs to prevent hearing loss caused by exposure to the high noise levels.

Never leave a mower running unattended.A mower left running unattended can be fascinating to a child. If the mower has an electric start, the key should never be left in the ignition.

Always start the mower outdoors. Never operate a mower where carbon monoxide can collect, such as in a closed garage, storage shed or basement.

Police the area.Before you satrt mowing, be sure the lawn is free of tree limbs, rocks, wires and other debris, which can get caught up in the blades.

The main source of danger is the blade. To perform its task efficiently, the mower blade must be sharp and travel at a high speed. If a hand or foot gets under the mower while the engine is running, it can cause serious injury. Never attempt to unclog or work on a lawnmower while the engine is on.

Disconnect the sparkplug wire.Any time it is necessary to reach under the mower, disconnect the spark plug wire to insure that the engine cannot start. It takes a little extra time, but not as long as it does to recover from a serious injury.

Check for frayed or cut wiring.When using an electric lawnmower, wires can easily get cut by the blade. Keep an eye on the wiring as you move the mower and check for frayed or cut wiring every time you mow.


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