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June 30, 2015

Choosing The Right Homeowner’s Insurance

As a homeowner, you are required by law to carry homeowner’s insurance. Unfortunately, many people do not carry the right homeowner’s insurance or the correct coverage amount. When buying a new home, most people are anxious to get the buying process over with to quickly, get settled in. Because of this, sometimes only minimum insurance is purchased, just enough to cover the minimum requirement. However, this coverage amount is never modified so when disaster strikes, the homeowner quickly discovers the coverage was not enough.

The most important thing you can do for you, your family, and your property when buying a home is to conduct in-depth research, and then work with a qualified insurance representative to ensure you never find yourself in this type of disastrous situation. Start by working with a reputable company. Remember, the size of the company is not what matters. Instead, you want a company that underst ands homeowner’s insurance and one that can guide you to the right type and amount of coverage.

If you know someone that is happy with their homeowner’s insurance, you might set up a meeting with that company to see if they can help with your needs. Otherwise, check the local Better Business Bureau, asking for and checking referrals. In addition, make sure the company is financially stable, one that guarantees its services, and a company that offers outst anding customer service to efficiently h andle any questions or claims.

The right representative will help you locate and maintain appropriate insurance. However, for the company or agent to underst and the insurance industry as well as your specific needs, proper training, knowledge, responsiveness, patience, and service are m andatory. As mentioned, availability is another important factor when choosing an insurance representative. When a crisis strikes, being able to get in touch with the representative in a timely manner helps resolve the issue while building a relationship of trust and confidence in the representative’s abilities.

Then, your homeowner’s insurance should be affordable. Obviously, you want to purchase the requirement but also the amount of insurance that would ensure coverage of your home and personal belongings in case of disaster. A good insurance representative would work with you to ensure that you are not paying for something you do not need while also making sure you have coverage where you do need it. The process of choosing the right insurance coverage is an important one so look for a company or agent with whom you can freely discuss your needs.

Just keep in mind that you will find a number of different insurance packages sold each providing different focus. When you shop around for the ideal policy, you want to make sure your policy covers fire, windstorm, tornados, hail, smoke damage, v andalism, and any other damage to your belongings or home. Additionally, if you live in a flood or earthquake zone, while coverage may not be a part of the st andard policy, it might be something you can add on, providing additional protection for your home.

December 31, 2014

7 Things Seniors (and Everyone Else) Should Know About FDIC Insurance

Older Americans put their money… and their trust… in FDIC-insured bank accounts because they want peace of mind about the savings they’ve worked so hard over the years to accumulate. Here are a few things senior citizens should know and remember about FDIC insurance.

1. The basic insurance limit is $100,000 per depositor per insured bank. If you or your family has $100,000 or less in all of your deposit accounts at the same insured bank, you don’t need to worry about your insurance coverage. Your funds are fully insured. Your deposits in separately chartered banks are separately insured, even if the banks are affiliated, such as belonging to the same parent company.

2. You may qualify for more than $100,000 in coverage at one insured bank if you own deposit accounts in different ownership categories. There are several different ownership categories, but the most common for consumers are single ownership accounts (for one owner), joint ownership accounts (for two or more people), self-directed retirement accounts (Individual Retirement Accounts and Keogh accounts for which you choose how and where the money is deposited) and revocable trusts (a deposit account saying the funds will pass to one or more named beneficiaries when the owner dies). Deposits in different ownership categories are separately insured. That means one person could have far more than $100,000 of FDIC insurance coverage at the same bank if the funds are in separate ownership categories.

3. A death or divorce in the family can reduce the FDIC insurance coverage. Let’s say two people own an account and one dies. The FDIC’s rules allow a six-month grace period after a depositor’s death to give survivors or estate executors a chance to restructure accounts. But if you fail to act within six months, you run the risk of the accounts going over the $100,000 limit.

Example: A husb and and wife have a joint account with a “right of survivorship,” a common provision in joint accounts specifying that if one person dies the other will own all the money. The account totals $150,000, which is fully insured because there are two owners (giving them up to $200,000 of coverage). But if one of the two co-owners dies and the surviving spouse doesn’t change the account within six months, the $150,000 deposit automatically would be insured to only $100,000 as the surviving spouse’s single-ownership account, along with any other accounts in that category at the bank. The result: $50,000 or more would be over the insurance limit and at risk of loss if the bank failed.

Also be aware that the death or divorce of a beneficiary on certain trust accounts can reduce the insurance coverage immediately. There is no six-month grace period in those situations.

4. No depositor has lost a single cent of FDIC-insured funds as a result of a failure. FDIC insurance only comes into play when an FDIC-insured banking institution fails. And fortunately, bank failures are rare nowadays. That’s largely because all FDIC-insured banking institutions must meet high st andards for financial strength and stability. But if your bank were to fail, FDIC insurance would cover your deposit accounts, dollar for dollar, including principal and accrued interest, up to the insurance limit. If your bank fails and you have deposits above the $100,000 federal insurance limit, you may be able to recover some or, in rare cases, all of your uninsured funds. However, the overwhelming majority of depositors at failed institutions are within the $100,000 insurance limit.

5. The FDIC’s deposit insurance guarantee is rock solid. As of mid-year 2005, the FDIC had $48 billion in reserves to protect depositors. Some people say they’ve been told (usually by marketers of investments that compete with bank deposits) that the FDIC doesn’t have the resources to cover depositors’ insured funds if an unprecedented number of banks were to fail. That’s false information.

6. The FDIC pays depositors promptly after the failure of an insured bank. Most insurance payments are made within a few days, usually by the next business day after the bank is closed. Don’t believe the misinformation being spread by some investment sellers who claim that the FDIC takes years to pay insured depositors.

7. You are responsible for knowing your deposit insurance coverage.

Know the rules, protect your money.

June 17, 2013

My Bank Makes Me Buy Homeowner’s Insurance

I just acquired ownership of a new house and the bank told me I had to buy homeowner’s insurance on the house. Homeowner’s insurance is expensive, and I just do not need more expenses. This house cost me enough. Where does all this end? I stood up to the bank and refused to bow to their stupid rules and buy expensive homeowner’s insurance.

Do you know what that darn mortgage company did? They went forward and put hazard coverage on my house, and I have to pay it. They gave me some stupid story that there are no guarantees that my house will not be destroyed in a weather related incident or by a fire at some point and they want to protect their interest and be able to get their money back in the event the house is destroyed. They did not even insure my possessions.

This drove me to examine homeowner’s insurance and what I found was it was a lot less expensive, so they forced me to buy a private policy because theirs was too expensive. My house and possessions are now covered. If someone is injured on my property and I am sued, I am protected. If my house becomes destroyed, I am covered. If I lose my job, my payments are paid for me.

I guess I made a big mistake by not buying homeowner’s insurance in the beginning. Do not make my mistake. Buy your homeowner’s insurance today.

April 13, 2011

Guidelines for Keeping Credit in Check

Imagine you are at an auction and an antique lamp you love is about to come on the block. When you viewed the auction items earlier, you placed a value of $100 on the lamp. It is late in the auction, you have planned your bidding carefully, and you have exactly $100 in cash left in your pocket.

Price Equals Value

When the bidding reaches $90, you and one other bidder are still in the game. So, what is the likely outcome? If the bidding goes to $100, you will either get the lamp or drop out of the game. In this case, the amount of cash you have left equals the value you assigned to the lamp and effectively limits the amount you can pay. Assuming you are alone and cannot borrow some money from a friend, what you are willing and able to pay is controlled by how much money you have in your pocket. In this example, we might say the price of the lamp equals its value.

Exp anding Value

Let’s now modify the scenario slightly and see how the outcome might change. Instead of it being late in the auction, this is one of the early items to go on the block, and it will be the first item on which you will bid. You have $500 in your pocket, the total amount you have allotted for the entire auction. The bidding has reached $90. What should you do? What are you likely to do?

Since you originally placed a value of $100 on the lamp, you should be prepared to drop out if a $100 bid does not secure the lamp. However, unlike the first scenario, in which you only had $100 left, you have a full pocket. Depending on how much you want the lamp, it is possible that you would exceed your initial limit and continue bidding, particularly if you thought that a bid slightly over $100 might be successful. What’s the big deal about going over a little? After all, you may not even be successful on some other items of interest.

Although in this case it’s probably not a “big deal,” you have exp anded your definition of value. What was originally a $100 value has been exp anded to, perhaps, a $110 value. Notice how easy it is to lose one’s sense of value and have something that you want become something that you feel you need.

The “Value” of Increased Buying Power

Okay, now let’s change the scene once more. This time, in addition to cash, the auction house will accept payment by credit card. What can happen to your sense of value when your buying power has been increased?

It appears that people may be less quality conscious in their buying behavior, may not negotiate as skillfully, and may pay more when buying by credit card than when making an identical purchase by cash. If the bidding were to surpass $100, it is quite likely that you would be willing to pay far more than your original assessment of what the lamp was worth.

This possibility suggests that “hard money” and “plastic money” carry different meanings. Hard money (i.e., actual dollars in your pocket or checking account) tends to be perceived as finite—when you run out of dollars, you’ve exhausted your buying power until you obtain more dollars. On the other h and, credit cards can exp and your buying power up to the credit limit of the account.

The alluring aspect of being able to buy on credit can become transformed into an exp anded sense of value. In the process, it is easy to lose track of the relationship between price and value, and to pay more than we know an object is worth. It is this changed sense of value that is, perhaps, the most concerning aspect of credit card purchases. We simply lose our sense of what a good deal is all about, and we become less smart about our shopping.

Buying on credit can be a great convenience, and it can make sense when we are temporarily short of cash. However, when buying on credit becomes our st andard way of doing business, it can have some highly undesirable consequences. One way to guard against credit card abuse is to ask two questions when making a credit card purchase. First, would I still purchase the item if I were paying cash? Second, would I pay the same price if paying by cash?

By keeping the focus on value, you can better distinguish between things you would like to get and things you absolutely must have. Making this distinction can help you avoid the major pitfalls of buying on credit—overpaying on individual items and spending beyond your means.

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This article appears courtesy of Karl Susman. Karl Susman is a representative of the New Engl and Life Insurance Company. He focuses on meeting the individual insurance and financial services needs of people on the West Coast. You can reach Karl at the office at (424) 785-4337. New Engl and Life Insurance Company, 501 Boylston Street, Boston, MA 02116

Choosing The Right Homeowner’s Insurance

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