Jan 09

A Guest Post today –

Most states in the country require drivers to either carry liability insurance minimums, or to carry bonds that prove they can financially afford driving without it, should an accident occur. Cost of insurance per individual depends on a number of factors. These factors are called risks.

The car that you drive can influence the cost of your insurance. Something that has more safety features will cost less than a sports car with a larger engine. Even the color of the car can influence the risk of the vehicle.

The age and sex of the driver also determines the risk. Typically, teenage boys have higher risk than teenage girls. A guy who drives a red sports car is a higher risk than a woman who is the same age driving the same car. Family can influence the cost as well. People with young children are statistically more cautious drivers than those without, so their rates are lower.

The other major factor in determining the cost of insurance is the record of the driver. Someone with speeding tickets will pay more than someone without because the risk of accident is considered to be higher due to faster driving speeds. Someone else the same age with accidents on the record will pay more than those with speeding tickets because of the track record for actually having accidents versus the risk of the speeder getting into them.

The city or state you live in can also influence the risk. Someone living in a more rural area will pay less than someone else with the same car and same driving record who lives in a larger city. This is because larger cities and more populated areas have more accidents. The cost of insurance payouts the company has to make in that particular area is distributed to those who carry insurance in that area. This same idea goes along with the most expensive states as well.

There is also a different class of high risk insurance. Drivers who have high risk insurance are those who have multiple accidents, speeding tickets, or DUI convictions on their driving record. Typically these drivers get their insurance from a pool of insurance carriers who share the risk involved with insuring high risk drivers. High risk drivers are required to get SR22 auto insurance instead of standard insurance.

This insurance coverage is a bit more costly than standard insurance, and it requires the driver to file special paperwork with the DMV to get driving privileges reinstated after a DUI or uninsured traffic accident. Not every insurance company offers sr22 auto insurance, making it more difficult to obtain the proof. The period of time the driver is required to carry this insurance is determined by the courts. In some cases, the insured carries it for a year; in other cases, the insured carries it for 3 years. It typically depends on the offense.

Avoid the need for sr22 insurance by driving safely, and never driving under the influence. If your state requires insurance or bonds, make sure it is kept up to date.

written by Joe \\ tags:

Dec 21

A Guest Post today from Crystal –

Life insurance is little more than an afterthought for many young people. With their entire lives ahead of them, few if any responsibilities and minimal consideration of their own mortality, life insurance seems like little more than a way to waste money and not have fun because of it.

However, full-scale adulthood eventually sets in. In what seems like no time, many people marry, have children and make a number of other personal and financial commitments that all depend greatly on their continued health.

These people often take out life insurance policies to protect those they love from economic disaster regardless of what may happen in the future. It appears that at a certain point, life insurance becomes necessary in the lives of many people, but at what point? Just how old do you have to be to start thinking about life insurance? 30? 45? Should you apply for a policy from your deathbed?

The answer is it’s never too early, once you have responsibilities, that is. No matter how young you are when you have a family that depends on you, their needs will remain the same in your absence. The unpredictable nature of life often leads to unexpected consequences. Check out the official AAMI website at http://www.aami.com.au/life-insurance

The next person to meet with an untimely demise will not be the first, and so it is always advisable to ensure the security of those you love should tragedy strike in the form of a speeding bus.

Getting a life insurance policy at a fairly young age also saves you money. It is actually better to get life insurance the younger you are, as insurance companies will see you as a safe risk and offer you an excellent rate provided you don’t have the health of someone much older.

Waiting until you are a certain age or until you already have health problems could result in much higher premiums than you would have otherwise paid, and even the risk of outright denied coverage should you develop a health issue or lifestyle habits deemed uninsurable before applying.

Life is uncertain, and so it is important to have a viable contingency plan for virtually any foreseeable event. As soon as you are in a stage of life where others depend on you for their survival, you should consider taking out a life insurance policy.

A life insurance policy helps protect those who would have great difficulty providing for themselves in the absence of a policy holder of any age. If you can find some room after the party budget, you should certainly consider it.

written by Joe \\ tags:

Oct 26

I’ve seen enough murder mysteries for my gut reaction to be, “Enough so your family won’t need to sell the house, drop out of high school, and move to van down by the river; But not so much they are happy to see you in the casket, or worse, conspire to put you there.” While I offer this tongue-in-cheek, it actually starts a dialogue for discussing your true needs, a minimum and maximum amount.

Let’s start with the biggest expenses many of us are up against, our house and funding college for our children. If your kids are already adults, your spouse may not want to keep the house after you pass. If you still have school age children, or your spouse will stay in the house, it would be a great start to have that mortgage paid in full with the life insurance proceeds. Term life’s coverage will  remain the same for the duration of the term, but you’ll be making mortgage payments, so will have less need for the mortgage-targeted portion of the insurance. This factor will help offset inflation a bit over that term. You are likely saving for your children’s college tuition, and should account for this as well. From College Data, “According to the College Board, the average cost of tuition and fees for the 2012–2013 school year was $29,056 at private colleges, $8,655 for state residents at public colleges, and $21,706 for out-of-state residents attending public universities.” This is more than a three to one range from state school to private.  It’s okay to estimate on the high side and find you have a bit extra. So far, these two costs might range from a low of $100K, up to $500K or more. Medical school anyone?


Next comes the real math. How much is your income that insurance will need to replace? Financial authors still tend toward the 4% rule, suggesting that you can withdraw 4% of a nest egg each year, adjust for inflation, and have a good chance of not running out of money. This means that for every $10K you make, $250K in life insurance is required to replace that stream of income. For a $40K/yr income, $1 million is needed. Of course, one doesn’t live off their gross income, but rather their net. This is what’s left after Social Security, Taxes, Retirement Savings, etc. That’s why this math is not an exact science, but rather, a starting point for how to determine your insurance needs.

Once you have a number in mind, it’s time to start shopping. Are you in good shape, physically? Do you smoke? (Gee, I hope not!) Do you have any pre-existing conditions that might make you seek to find life insurance without a medical exam? These are among the things to consider when shopping for your policy. On a personal note, we bought our policies 15 years ago when our daughter was born. After the terms came up for renewal, we stuck to the same value policies, as our college savings and mortgage payoff needs dropped, but inflation make up the difference. In five years, the mortgage will be gone, and the college bills will at least be a known quantity. And it’s fair to say that most days, my wife prefers me to the bundle of cash she’d get if I passed on.

written by Joe \\ tags:

May 30

A Guest Post today from my friend Crystal –

No-fault states often require that people purchase much more auto insurance than tort states, so it’s not a surprise that nine of the ten cities with the most expensive auto insurance rates are in two no-fault states. The following 10 cities have higher auto insurance rates than any others in the country:

• Detroit, Michigan ($4,599)
• Highland Park, Michigan ($4,214)
• Brooklyn, New York ($4,133)
• Fort Hamilton, New York ($3,947)
• Grosse Pointe Park, Michigan ($3,504)
• Bronx, New York ($3,443)
• Allison, Texas ($3,385)
• St. Albans, New York ($3,233)
• Springfield Gardens, New York ($3,213)

According to autoinsurancequotes.com in no-fault states, it doesn’t matter who caused the collision. The at-fault person will not be required to pay the medical bills of everyone who was hurt. The insurance company that insures the vehicle in which the injured parties were riding will be required to pay the medical bills up to the limits of the PIP insurance policy.

Required Insurance Coverage in Michigan

Along with Personal Injury Protection (PIP) insurance that pays everyone’s medical bills, Michigan residents must purchase Property Protection insurance in the amount of $1 million. Even though Michigan is a no-fault state, drivers are still required to purchase bodily injury and property damage liability insurance coverage. Generally, people are only required to purchase bodily injury and property damage liability insurance coverage in other states. Therefore, the greater amount of coverage and the higher limits will naturally increase the prices for people living in Michigan.

Required Insurance Coverage in New York

New York is also a no-fault state, and a greater amount of insurance coverage is required of drivers here as well. Motorists must have a certain amount of bodily injury and property damage liability coverage, but they are also required to have PIP insurance as well as uninsured and underinsured motorist bodily injury coverage.

Higher Rates for Everyone

In the cities mentioned above, even people in the most desired demographic who have the greatest driving records will be quoted auto insurance rates that are higher than they would receive in other cities. The reason is that insurance companies base their quotes on the zip code in which their customers live. For example, insurance companies perform research on different cities in which they sell insurance, and they often discover that more claims for auto insurance coverage come from customers from a particular zip code. Because this is the case, anyone who is driving in this zip code has a greater chance of filing a claim with the insurance company, and these drivers will be assessed higher rates.

Auto insurance companies set rates based on more than just the number of claims filed. The number of accidents and thefts and vandalism rates also play a role. Cities with a high risk for most or all of these factors are going to be the ones that have the highest auto insurance rates. Auto insurance companies charge clients who are less likely to need to use their insurance coverage lower rates, and those who live in high risk areas in no-fault states don’t fit this description.

How is your car insurance bill? Anything close to these top-ten cities?

written by Joe \\ tags: , ,

Jul 12

It’s remarkable to me that a law intended to help people who seem to need it the most has turned into such a political football.

It turns out that Jane and I are covered by insurance, we chip in a bit, our employer a bit, and there’s a convoluted system of deductibles and copays. We then struggle to do the math and put some pretax money into a flexible spending account to make our co-pays tax free.

I know that not everyone is so fortunate, I know a gal who is not able to work, and spends more than half her monthly worker’s comp payment towards insurance. But someone living on such a low income would not be expected to pay more than about 6% toward their insurance premium, so when the Affordable Care Act kicks in, she will see an upside to her spendable money of most of her current premium.

So far, the focus has been on the penalty aspect of Obamacare, instead of the benefit the needy will receive. As I read the numbers that would apply to low income families with 2 kids, they will be able to purchase insurance that would now cost $12000 per year for $2200. When you read the Summary of New Health Reform Law, you find that for the 90%, the plan looks to be a positive thing. I arbitrarily choose 90% because I know that this is a zero-sum game, someone needs to pay the supplement for those who are currently uninsured but will receive a discounted rate. For all of the money government wastes,  the pork barrel spending, the bridges to nowhere, I’d be happy to pay a bit more knowing my money will keep a lower income family’s child from getting the care she needs.

The document isn’t that long, 13 pages compared to the near 100 pages of the recent supreme court ruling. As Kay Bell who writes at Don’t Mess With Taxes has discovered, it’s Congress who want to kill this plan because Killing Obamacare means better health benefits for members of Congress. You realize, our Congressfolk are above and beyond any of the laws they make for us common folk. They are not part of the social security system, and have medical coverage you or I would really envy.

Our Healthcare System is broken, and I can’t say that Obamacare will fix every aspect of it, but I think it’s a step in the right direction. Those who are uninsured won’t be turned away for emergency care, nor should they be, and a system to include them in the process is a good step in the right direction, in my opinion.

Last, a website, ObamaCare, The Truth, The Lies, offered an infographic on What Obamacare Means to New Yorkers. It focused on the added cost, the penalty for people of different incomes and showed their total tax burden. Unfortunately, the accounting firm that offered the numbers didn’t calculate the taxes correctly. They published number that showed a tax on one’s gross income, skipping the forms, and all potential adjustments. A single gal making $80,000 does not have a taxable income of $80,000. I guess they never read my article on marginal rates.

written by Joe \\ tags: ,