Too Busy? Not Really!

Sometimes when I think about years ago, I imagine that I was less busy and that I had more time.  Maybe you think that too from time to time, but it's not true.  We chose to do different things today than we did when we were younger, and sometimes we have more responsibility than we did early in life, but all in all we still get 24 hours each day to spend as we see fit.  My brothers and I are good examples here ... we all seem to be too busy with work and life to visit each other very often but we all somehow manage to squeeze out a movie and dinner out every now and again.

 

Even as I'm writing this I look back and it's been a month or more since my last post, and I'm thinking I just didn't have time to write it.  But that's a lie, I did have time, I just chose to ignore some activities in favor of other ones.  The time we have doesn't change, we just change what we do with it.

Now, don't get me wrong we are all busy, but it is the important stuff that we should pursue and ignore the things that don't mean much to us.  I enjoy fishing, but I rarely get out to fish and I'm always saying I'll go when I have time, but if the truth be told, I could just go fishing and fill in the rest of my life around that time. 

 

So take a moment this week (and every week) and decide what is important, then do that and the rest of your life will still be there when you're done.

 

J

 

Protect what is really important with life insurance, call me for a quick quote!

Secrets Revealed!

I'm often asked how to lower the cost of insurance.  People are quick to point out that their premiums have gone up every year and they want to know why.  I understand and while they don't typically blame me I'm a convenient target for their aggravation.  I try to be patient with folks but really I'd like to point out that everything increases in cost and your insurance is in place to protect that ever increasing replacement value.

 

In other words as the price of auto parts goes up the cost to fix them when the are in an accident will also increase, and like all businesses, the insurance company has to make money or it will go bust.  When repair parts and labor costs start going down the insurance company can begin to look at becoming competitive on pricing.

 

There are only two ways to lower your premium's ... here it is the big secret revealed;

 

1.  Buy less stuff ... if you have 12 cars you are going to pay 12 premiums ... if you have a half million dollar home, you will pay more than the guy with a hundred thousand dollar home.

 

2.  Accept more responsibility for your risk ... we talk about deductibles in the insurance business but really a deductible is just how much are you willing to share in the damage?  If you have a zero deductible or a $100 deductible you are telling the insurance company that you will make a lot of little claims.  If you set your deductibles at $1000 then they know you are not going to ask for their help until you really need it.

I hope this helps everyone!  But I know that rising prices get on our nerves, remember I pay the same insurance rates that you do, so find an agent you trust and have a conversation about the cost verses the benefit.  You may decide to down size or at least shoulder more of the cost of a loss.

J

Call me for all your insurance needs. 

Let's fix Washington!

Are you listening to the junk that Washington is spewing these days?  I know that politicians are always making a big deal out of little things and down playing big things so they are always casting themselves in the best light, but come on!

Let's take jobs for instance ... the White House says that Congress is being lazy and if they don't pass the JOBS BILL, all is lost and it's Congress's fault.  Congress says that the White house is going to tax those that can afford to create jobs and make it less attractive for growth.  The White House says that we have to tax the rich to correct the budget and give relief to the working class, the Congress says we need to stop spending on social programs and let the wealthy create more wealth and create jobs.  Who do you believe?

Being the social genius that I am ... I have come up with a plan that will fix everything.  First off, we should level the field ... I pay taxes and I pay for my own health insurance.  So I would say that everyone else should have to do that too.  Including congress and the president ... We as a nation spend billions on the health care of our employees and well ... nobody else is getting that so they shouldn't either.  The one exception should be our military and police forces ... we need them in top physical shape and we don't pay them enough.

On taxes I see a flat tax on income as a fair compromise.  Eliminate the tax brackets, loop holes and all the infrastructure that manages that ... everyone pays a flat percentage of their income no matter how much they make or where the income is being generated from.  Then the only IRS function would be to make sure that all income was reported and the bill paid ... no more tax returns, no more audits, no more huge cost from 106,000 employees.  The projected budget for the IRS in 2011 is just over 12 and a half billion dollars. 

Once the President and Congressmen are forced to pay taxes and 100% of their health insurance premiums they'll figure out the least painful path for us all.

There you have it ... all fixed, I lessened the expenses, increased the income and leveled the playing field for everyone in one fell swoop! 

Next victim!

How to Save Money on your Auto Insurance!

This is a topic that we hear discussed on TV ads all the time.  Isn't it weird how every company claims that customers who switched saved hundreds? 

How could every company be the cheapest?  Can you still have the coverage you need and get it cheaper?  Well the answer isn't too far off what your mom and dad told you when you were younger ... You never get something for nothing! 

First off, the TV ads you see are based on the people that switched and reported their savings ... so if 5 people saved and average of $500 when they switched and they told the company about it, then the company could use in their advertising that people who switched saved an average of $500.  That doesn't mean that everyone will save that much or even if the ones that did kept their same coverage.

If you want to save money on your auto rates you can simply cut your coverages to the state minimums and remove the physical damage coverage from your auto.  That will save you monthly ... of course if you hit someone and put them in the hospital, your insurance will run out quick and you'll be paying out of pocket for their broken bones, head wounds and nursing care, not to mention you'll need a new car so you can get to work and pay those new bills.

Insurance is about managing risk, and you have to decide if your risk of financial ruin is more important than a few dollars a month.  If you think your current insurance is too high, ask your agent if he would suggest cutting anything ... I tell my clients this one hint, if you have a car that is 10 years old or older, look up the blue book value to see if full coverage is worth it.  Many times the value of these older cars is so low that full coverage won't get you a whole lot if you totaled the car, so you can switch to liability only and save quite a bit. 

Personally I would never recommend that you lower your liability limits, because one mistake on your part would put you at risk financially with consequences that would last for many years.

J

Buy Local ...

Buying local is more than just a saying ... it is a frame of mind and an important frame of mind if you ask me.  Every dollar you spend is helping some one's community, either yours or someone else's.

Sometimes you need to go outside your community to get the quality, brand or type of service or product you need.  I will often buy herbal supplements that are made from herbs that only grow in tropical Asia.  We sometimes use vanilla that comes from the South Pacific.  But given the choice I'd rather buy my goods and services from a person or company that lives in the community where I live, pays taxes in the community that I pay in to, and who's fortune and welfare is tied to the local community.  That person will help improve my community and is vested in the success of everyone in the area.

On the occasion that you have to spend money with companies that don't have an interest in your community, you are losing the benefit of that money to what ever community the company resides. 

It's greener, safer, economically sound, and more trustworthy than buying services and goods from far away places.

J

Can you really name your own price on auto insurance?

So the lady in the strange white room says "tell us what you want to pay, and we'll design a policy to fit."  Wow, does that sound crazy to anyone else?  Can I really just tell the insurance company want I want to pay and they'll give me the coverage I need to fit that price?  Well then sign me up and I'll pay $1 a year!

Of course this idea is just a sales gimmick that is kind of dangerous.  Young people with little experience will hear that message and think that it is true.  They'll call in and name their own price and end up with the state minimum (which is no where near enough) coverage.

Liability covers the other driver if you cause an accident or it is deemed to be your responsibility.  So if you slide through a red light on icy roads this winter and hit another driver causing them bodily injury, it is your liability insurance that will cover their injuries.  If you don't have enough to cover their injuries they can sue you for the rest.  The average cost for just for a broken leg is over $8,000 if it were serious enough to have to be air-evaced to a bigger hospital the bill for the chopper ride could be $15,000 to $20,000 with out the original ER visit or the bill from the hospital that you are being flown to. 

So the point is ... you need liability limits of at least 100,000 per person for bodily injury, and that is what I would consider the bare minimum.  You need to let your insurance agent know what your assets are and you income so they can provide you with the best advice about how much liability to have on your vehicles. 

Oh and NO ... you can't name your own price, that's just silly!

What's the Cheapest Life Insurance?

I hear this question a lot, and it is a easy question to answer.  It's the life insurance that you buy when you are young, healthy and don't need it.  So what do you do if you've let the years slip by and find yourself in need of a policy to protect your family?  I'll give you the short and simple answer.

Straight annual renewable term, which renews automatically each year and is based on your age.  But if you are getting up there in age this quickly becomes too expensive.  This type of term is the cheapest if you are talking about right now.

Traditional whole life which builds cash value and eventually begins paying it's own premiums when purchased for a young person will be the cheapest when they are older because the cost never goes up and it will have value to use later.

But my favorite cheap life insurance is the FREE kind!  It's called Return of Premium term.  The name says it all, it is a term policy that lasts for 20 or 30 years and if you die during that time your heirs get the death benefit but if you live (which most are hoping to do) you get all your premium back (tax free).

Why doesn't everyone buy this option, you ask?  Well some financial experts (the next statement makes this sound funny) suggest it is smarter to buy the slightly less expensive term policy and invest the difference between the two.  Hhhhhmmmm?!?!?!?  Sounds good except you are not guaranteed to even make back what you invest let alone enough to pay for the life insurance and still come out ahead.  Why not buy the Return of Premium policy and in 20 years have a lump sum to invest (guaranteed) and have protected your family all along the way?

So, what's the cheapest life insurance? Free!

J

What makes my Homeowner’s Insurance go up?

You know, everyone asks why their insurance goes up in price and there is not a simple answer. Like most pricing issues there are several factors, and while some are in your control others are not.

The average price of gas at the pumps here in the Midwest is currently $2.64 and this time last year the average for the Midwest was $2.52. Why did it go up 12 cents in a year? The average cost for electricity in Indiana went up about a half cent per kilowatt of power in the last 12 months. Chocolate chip cookies cost an average of 5 cents more this July than they did in July of 2009. Cherries are up 77 cents a pound over their price last July.

In general there are some big reasons for the price increases listed above but in most cases … the price just went up. Homeowners insurance is just like any other product and as the cost of doing business raises the price offered to the public raises. But there are ways that you can control that increase or lessen its impact on your policy.

To begin with, it’s important to understand that homeowners insurance is a business and the only reason that companies get in to the business is to make money. That being said, homeowners insurance like all other insurance policies are contracts and the company is bound by the terms of the contract, and it is very much a one sided contract. The insurance company must provide the coverage that the policy dictates as long as the policy is in force. However, the customer can stop paying premium or cancel the contract anytime they want. So, what makes the company raise premiums? There are four basic events that increase the cost of your homeowners insurance.

First, if you have several claims in a three year period no matter what size those claims are you will see an increase in premium. Each claim, no matter how small has a fixed cost. The company has to pay someone to take the claim and enter it in the system, they have to pay another person to review the claim and determine if it is cover and what the liability is to the company. The amount paid to the client may be just a small portion of the overall cost to the company and so over time a client that has many small claims will be unprofitable.

Second, if you experience a single large loss you will see an increase in premium. If a client has a fire that causes say 20 thousand dollars in damages, and lets say they pay one thousand dollars a year in homeowners premium, the company may increase their premium by a couple hundred dollars a year for three to five years. This means the client will pay extra until the loss is old enough to be ignored then the client can request to be put back in a lower rate category.

Third, if an area that an insurance company has a lot of business in experiences a huge loss in a single year they will raise everyone’s premium to cover the losses in that area. Just like many companies involved in insuring homes in Florida during hurricane season lost a great deal of money rebuilding those homes, so they spread those loses on to clients around the country making everyone’s go up a little bit.

Finally, if the cost of labor, paper, postage or any other business expenses increases the cost of doing business to a point that it impacts the company’s bottom line, all their customers will receive an increase in premium. Just like at the local burger joint the cost of a burger now reflects the higher wages that the help gets paid and the increased cost of the beef used to make those burgers. My dad tells me about buying a burger for something like a nickel, you won’t see that price again just because the cost of materials and labor continues to go up.

So, what do you do if your premium goes up on your homeowner’s insurance? Well, first off realize that price increases happen and if you have had losses like what is described above you will be able to request to have your rate reevaluated after three to five years. If the increase was just an across the board increase do to rising cost of business, or losses elsewhere then everyone is getting those higher premiums and you should discuss with your agent ways to control your cost.

One way to control your premium is to raise the deductable. Your deductable is the amount of money you will pay out of pocket before the insurance company is responsible. As a general rule of thumb, the higher your deductable the lower the premium. Many folks who took out policies twenty years ago had $250 deductibles because that was a reasonable amount to pay out of pocket. Today, most home repairs cost three or four times what they cost in the late eighties, so your deductable should reflect that increase as well.

Nobody likes paying more for anything, but your agent can talk to you about what is the best strategy for controlling your premium while keeping you protected from total loss. Schedule a meeting with your agent and discuss what coverage you need as well as how you can best manage your asset protection. Communication with your agent will answer a lot of your questions and help you achieve the goals that you have for protecting your home and controlling your bills.

J