Ways People Overpay For Car Insurance
Posted by David Schneider

Auto insurance is compulsory and most find that acquiring it is a pain. People often do not take the time to seek out better car insurance deals. They see a popular car insurance brand and assume that a major brand has the best deal available. This just isn’t always true. At times brand recognition can hurt you. Here’s what to do when shopping for car insurance.
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聽Compare and Contrast Car Insurance
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聽The first way that people overpay for car insurance is by not shopping around enough between different carriers. The Internet makes rate shopping increasingly easy by being able to compare rates between different car insurance companies without having to endure the hard sell tactics of an agent. As there can be a huge discrepancy between different car insurance deals - as much as a 300 percent difference - comparison shopping can pay off big.
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聽Provide Relevant Details
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聽Comparing general rates is not nearly enough to avoid overpaying for car insurance. You need to factor in your age, driving record, type of car, and minimum number of miles driven a day. While one car insurance company may boast to offer lower rates, they may not necessarily offer low rates for a car that’s ten years old or if you have a spotty driving history. You must put in an informed quote request. Just looking for “cheap car insurance” doesn’t quite cut it.
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聽Safety, Anti-Theft, and Driving History
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聽Get an anti-theft device. An anti-theft device will ensure that the car has less a likelihood of getting stolen. Car insurance companies love that. Because an anti-theft device puts a car at lower risk for theft, insurance companies charge a lower premium for cars that have one installed.聽 While you’re at it, find a car that has a good safety rating. You will receive significantly lower premiums than you would get with a car with a poor safety record or聽whose features have been continually recalled. The quality and safety of your car can go a long way in saving you money. The safety of the driver himself is paramount as well. If you have a poor driver’s history, a safety training course can help reduce your payments.
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聽Increase Your Deductible
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聽Increasing your deductible on your car insurance is a tried and true method of reducing your premiums. For example, raising your $250 deductible to twice that amount will reduce yearly premiums overall.
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聽Put all of these components together and you should avoid having to overpay for car insurance on a yearly basis. To rate shop most effectively, make sure to clear up some of these issues before making comparisons between car insurance companies. If at all possible, you should purchase a new car or anti-theft device and then make your Internet quote requests. In addition, if it is possible to reduce the number of miles you drive a day, it can reduce your potential risk. Even delineating highway or city miles can change how you are viewed by a car insurance company.
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聽If you do all of these above steps, you could see a dramatic change in the cost of car insurance policies offered. Just don’t take the first offer you see, as there are a wide variety of policies out there, with differing policies surrounding the types of car, anti-theft protection, age of driver, miles driven and a number of other factors.

Adjust Your Homeowners Insurance When Making Home Improvements
Posted by David Schneider

Most homeowners know that home improvements aren’t just undertaken just to make a nice living space, or to add an extra wing or two to the house, but to significantly increase the value of the home. A number of mortgage offers out there are specifically designed for home improvement projects. Though you might be risking the home by opening up another mortgage, it can pay for itself by increasing the value of the equity you have built up in the home.
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聽Good news, but there is something else to think about as well. Though the value of your home may increase with, say, the addition of a pool in the backyard (depending on your market), this is also going to change the framework of your current homeowners insurance. The fact is that most any home improvement project, short of changing the knobs in the kitchen, is going to have some bearing on your homeowners insurance.
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聽Correctly Valuing Your Home
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聽The basic formula for calculating homeowners insurance is to insure the home for 80 percent of the replacement value. As mentioned, the replacement value just went up with the addition of a pool, or even just roof repairs, so you should go over your homeowners insurance policy to determine if the home is still adequately covered.
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聽To account for inflation, most insurance companies increase the amount of insurance periodically, but you should not rest on this slight increase. A significant home improvement project, or even an increased value for homes in the neighborhood on the whole, can change what you should pay for insurance. So while your home is more valuable than it was before the home improvement project, you will have to factor in higher premiums than before the project started.
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聽Types of Home Improvement Projects
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聽The amount you need to insure also depends on the type of project. For example, a garage repair project will need to be insured for less than a pool, which could require additional liability insurance. Generally, most home improvement projects will increase the value of a home by 25 percent, so this must be factored into homeowners insurance.
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聽Raising Coverage Before You Begin
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聽An important thing to keep in mind is that homeowners insurance can cover the cost of building supplies, so you should not just look to raise your insurance coverage after a project is completed, but before it even begins. In addition, you need to factor in how the improvement project is being performed. Is it being done by an outside contractor or are you doing it yourself?聽 In either case, you need to determine if those working on the home have adequate coverage in case of accident. Homeowners insurance can cover faulty work by outside contractors if they did not meet specifications.
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聽Generally what it comes down to is homeowners insurance should factor in directly to any home repair project, both before and after. Ignoring an increase in homeowners insurance outright is a major mistake. Factoring in that you could potentially supplement building costs for a home repair project should tell you that homeowners insurance is as important to home improvement as a home equity loan.

Advantages Of Participating Life Insurance From A Mutual Life Insurance Company
Posted by David Schneider

A mutual life insurance company is owned by the policyholders. The alternative is a stock life insurance company that is owned by the stockholders. Don’t confuse a publicly traded company with a mutual life insurance company, as they are separate entities. Mutual life insurance companies are becoming more scarce, but they still do exist and there are several advantages to buying participating life insurance from a mutual life insurance company.
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聽Keep in mind that not all policies bought through a mutual life insurance company fall under the heading of participating life insurance. There are only certain participating policies, most often whole life insurance policies. Policyholders of these participating policies can vote on corporate policy with the board of directors just as if they owned stock in the company. In a sense, the life insurance policy becomes a form of stock.
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聽Be Wary of Demutualization
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聽As mentioned, mutual life insurance companies are becoming a rare breed. If you are interested in investing in this sort of policy it is important to purchase a policy with a company that will not demutualize in the future. There are still stable companies that offer participating life insurance policies, but it is important to have some assurance that the company will not demutualize in the future. As demutualization increases, there is less competition for the remaining mutual life insurance companies, so several of these life insurance companies will likely stay solvent for the life of the term.
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聽Participating Life Insurance Policy Advantages
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聽The most basic advantage to a participating life insurance policy is profitability. You are not only investing in a personal life insurance policy, but in an entire company. The better the mutual life insurance company performs, the larger profit you stand to make. A whole term participating life insurance policy will pay off a dividend at the end of every year.
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聽Earning Dividends with Participating Life Insurance
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聽The dividend on a participating life insurance policies can fluctuate from year to year, and are not necessarily guaranteed, so it is important to set up a policy with a stable insurance company. The dividends are paid in several different ways. The policyholder can get the dividend back as cash, leave the dividend with the company to accrue interest, reduce premiums, increase the insurance policy, or to buy additional insurance.
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聽The most common use for participating life insurance dividends is to buy paid-up additions, or PUAs. These are additions to the policy, such as adding $500 in death benefits for a $100 dividend. Over the long life of a whole life insurance policy, this can significantly increase the value of the life insurance policy. While some may choose to cash out a dividend some years, the vast majority of the time the dividend will be put back into the policy itself.
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聽All of these choices show that the dividend on a participating life insurance policy can pay off in the long term. It doesn’t necessarily make sense for a short-term life insurance policy. The profits from participating life insurance dividends should be calculated over several years of a whole life insurance policy, rather than short-term gains.

Return Of Premium Life Insurance - An Interesting Alternative To Term Life Insurance
Posted by David Schneider

The return of premium life insurance almost seems like a scam, and you’re the scammer. It appears to be the best of both worlds. The life insurance policy pays off if you die, but if you live past the term, the life insurance policy pays out all of the premiums. Return of premium life insurance policies are aimed at those people who are cynical that a life insurance policy is even necessary.
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聽A great number of people don’t set up a life insurance policy because they can’t see themselves dying within the 10-, 20- or even 30-year period of a typical life insurance term. Responsible or not, this is a huge demographic of potential policyholders who might invest in life insurance if they were given some assurance that they’d receive back their premiums.
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聽For many, life insurance seems like lost money. Certainly, it’s a good safety net, but that point might not be reached for several decades down the line, with several decades worth of premiums. The fact is that people are living longer and life expectancy is being extended even further. Sixty years old is the new middle age.
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聽The Basics on Term Life Insurance
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聽Term life insurance is set for a pre-determined period at a set rate. This can be for a period as short as five years and as long as 30. After the term comes to an end, the policyholder must renegotiate the policy. As he is older, he could very well be stuck with a less attractive rate than was set initially. If you live longer than the policy, it is lost money, especially if the policy is not renewed.
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聽Return of Premium life insurance attempts to fill the void. If the policyholder outlives the term of the life insurance policy, he can either look to renew the policy or cash in the policy. Basically, it is a term life insurance policy with a money back guarantee. Every time you send in a premium it is not lost money, as you know you’ll be able to see the money again at a later date.
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聽The Costs of Return of Premium Life Insurance
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聽Unsurprisingly, Return of Premium life insurance costs more than traditional term life insurance: up to 30 percent more. For many potential policyholders looking into purchasing a policy, the payout outweighs the extra cost. The extra money that goes into yearly premiums will be paid back equally, so in effect you haven’t lost any money. For a typical 20-year term, you’ll be getting around a seven percent extra return on your investment, making up what you’ll be paid back in the future.
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聽So what’s in it for the insurance companies?聽 There’s still a profit to be had for Return of Premium insurance, as not every policyholder is going to cash out early. Indeed, just as many policyholders will stick with the policy for the full term, if not renew it for another period. In addition, some of that 30 percent premium is going to expenses. It’s not literally even money, but for all intents and purposes you get back what you put in.
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聽People with Return of Premium policies by and large are more loyal customers who stick with the policy for the long term, rather than cashing out early. The policy is attractive because it offers an additional safety net by placing cash in pocket while the policyholder is still living. Consider it a policy with both life and death benefits.

If Others Depend on Your Income, It’s Time to Get Life Insurance
Posted by David Schneider

At no time is life insurance more important if you’re the sole wage earner for a family. Without a solid life insurance policy, you put the family at risk if you die or are unable to work for another reason. In the latter case, it is possible to either borrow off the value of the life insurance policy or sell it to a secondary market. What it comes down to is that a life insurance policy is imperative if you provide the sole income to a family.
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聽Trouble arises because a sole wage earner might not be able to afford an additional policy. This is more perception than reality. The truth is that life insurance premiums are going down significantly, as much as five percent a year. Monthly premiums can be as low as $50 a month or even lower for certain policies.
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聽Keep in mind too that dependency on income can be a result of combined income, not just a sole provider. Take, for example, a situation where the husband and wife both work and the family could not stay afloat if either the husband or wife were to stop working. In this case, it would be necessary to open up a life insurance policy for both the husband and the wife. While this obviously increases the expenses for premiums, it is a necessary safeguard should something happen.
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聽Life Insurance and Preparing for the Future
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聽A couple might not necessarily have to live paycheck to paycheck. For instance, a couple with two children may make a fair profit every month after expenses. Even if one income stream was cut off, the single parent could potentially make expenses on a single income. This, however, does not account for future expenses, such as education, medical bills and other pressing issues that come down the pike.
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聽Life insurance is about planning for the future, not necessarily just about making current monthly expenses. If a two-income family can well afford monthly expenses then there is no reason to not add a relatively inexpensive life insurance policy. However, if monthly expenses are purely met by one person’s income then life insurance is an absolute necessity.
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聽Choosing a Life Insurance Policy for the Right Amount
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聽The most important factor in determining a life insurance policy is getting a policy with the right amount of coverage. You should calculate monthly expenses, as well as factor in future expenses, such as the cost of college tuition. One of the major mistakes new policyholders make is not getting a policy for the right amount. You need a policy not just equal to one year of expenses, but potentially well beyond that. In a single-income family, a small life insurance policy can be used up within a year’s time. While the money is helpful, it is a short-term help.
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聽The general rule is to buy a life insurance policy for five times yearly income. This depends, in part, on the age of the children in the home. For example, if the children are in their teens, and soon to be generating their own income, then you could possibly set the life insurance policy for lower. If the children are under ten years old, a larger, longer-term policy will be necessary.

Millions Need Life Insurance And It’s Getting Cheaper
Posted by David Schneider

It’s a cruel but appropriate mantra: “Nothing is certain but death and taxes.”聽 Everybody has to face that fact so everybody needs some form of life insurance. It’s a huge industry, as it literally pertains to everyone on earth! When there is such a demand for a product, prices generally go down, and that is exactly what is happening in the life insurance industry. Life insurance is now affordable for a broader swath of people.
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聽This is good to know because there are still a large number of people who consider life insurance the domain of the very wealthy. For people with lower incomes, it’s a difficult prospect to add another bill to the pile every month, especially for something that will not necessarily have an immediate payout. Death benefits from life insurance could pay out decades down the line.
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聽It is important to consider, albeit slightly morbid, that beneficiaries need financial protection in the case of an unforeseen death as well. Many are unconcerned about setting up a life insurance policy when they are at the peak of health in their 20s and 30s. As this is a time when income might be lower as well, people tend to avoid the topic altogether.
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聽Finding Cheap Life Insurance
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聽The life insurance industry now favors policyholders. Life insurance premiums have been falling at a steady rate, five percent a year from 2000. As a life insurance policy matures, premiums will go down. The average life insurance policy for a healthy 40-year-old is only around $600 a year. Divide that by twelve months and you’re looking at a $50 payment. It’s hardly an insurmountable debt.
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聽The Internet has been a huge boon to the insurance industry, as it is now possible for everyday people to get a bevy of information about life insurance policies without being contacted first by an agent. Comparison services also make it easier to compare and contrast life insurance deals between competing agents.
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聽If you’re looking for the cheapest possible rates for life insurance, it’s a good idea to go with a term insurance policy. Term life insurance pays out a benefit if the policyholder dies within the term of the policy. It’s a shorter-term policy with lower monthly premiums. Permanent life insurance is a life-long policy with higher rates. However, the rate could potentially be lower over the long haul, as the policy will not have to be continually be renewed, which can potentially lead to a higher rate on renewal.
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聽Healthy People Means Cheaper Rates
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聽The reason that life insurance policies are getting cheaper is for one reason: people are healthier. Due to medical advances and increased awareness of health issues, people are living longer, healthier lives. The result is that life insurance companies are at a lower risk for paying out death benefits. You can expect rates to drop further as medical advances are only going to increase in the coming years.
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聽What this means also is that advances in medical science allows people with health problems to get cheaper health insurance than ever before. Often, people with health issues avoid the issue of life insurance for fear that premiums will be insurmountably high. In the new, low-cost environment, this is not usually the case.

Secondary Market For Life Insurance
Posted by David Schneider

The secondary market for life insurance is a way for policyholders to cash in on their policy before the owner of the policy dies. There are several reasons this might be necessary. Perhaps the policy owner needs the money, he no longer has any beneficiaries or he can’t afford the premiums any longer and he wants to discontinue the policy. Before secondary markets arose, policyholders didn’t have many options.

In a secondary market transaction, the secondary market company then controls the life insurance policy. The secondary market pays all premiums, with the same payout on death benefits, and agrees to pay the policyholder up to three times the cash surrender value. This system came to fruition in the ’80s with the AIDS epidemic, when a number of people needed to cash out life insurance policies to pay expensive medical bills. Often it’s a last recourse, when other avenues have been extinguished, such as getting a second mortgage to pay off medical bills.

The Effect of Secondary Markets on Policyholders

This system sounds like a great way to get some money in a time of crisis, but it can affect everyday policyholders. As policyholders will choose to cash out a life insurance policy before letting payments lapse, there are fewer lapsed policies than before secondary markets were created. This is good news for policyholders because insurance companies don’t have to raise prices to cover their losses.

With any life insurance policy, the health of the policyholder has a major effect on the cost of the policy. If the policyholder has a pre-existing condition, premiums will go up, as it is more likely that the policyholder will receive death benefits earlier. Policyholders with above-average health can actually cost the insurance industry more money on secondary life insurance because the payout is larger. This can raise premiums. You should discuss with your life insurance policy both how current health affects rates as well as how the prospect of secondary markets for life insurance will affect premiums.

The Economy and Secondary Market Life Insurance

Due to fluctuations in the economy, many seniors are seeing a financial crunch and as a result, they are cashing in their insurance policies. By and large, seniors most commonly receive secondary market payouts, as they have put a substantial amount into a life insurance policy to make a payout worthwhile.

The knowledge that you can get a substantial payout for a life insurance policy has increased the number of life insurance policies that are sold every year. The main concern people have about a policy is the premiums. If these premiums can be given back before the end of the policy, more people are willing to absorb the monthly cost of life insurance premiums.

This “just in case” process makes it much easier to pay life insurance premiums well into the future, should financial circumstances changed. When informed of secondary markets for life insurance, many potential policyholders are more willing to secure a policy. The secondary market for life insurance is an attractive safety net.

Life Insurance In An Irrevocable Life Insurance Trust
Posted by David Schneider

An irrevocable life insurance trust (ILIT) is a policy that can’t be changed once it has been set up. The main reason to do so is to transfer ownership of the life insurance policy to a separate entity. Often this is done to avoid estate taxes on the life insurance policy, as the policy will not be taxed if it is held under the name of a living relative. The result is that any heirs to the life insurance policy will receive the full value of the policy.

There is one caveat. If the original policyholder dies within three years of setting up an ILIT, then the policy will still be subject to estate taxes. This is a reason for not declaring an ILIT very late in the policyholder’s life. However, as an ILIT cannot be changed, this could present potential problems if the policyholder wants to transfer the policy to a different beneficiary. This bears mentioning because it is fairly common for people to change their wills late in life. There is not the same freedom with an ILIT.

Often, the ILIT is transferred to a spouse, so estate taxes can be deducted via an estate tax marital deduction. One consideration is that these assets are now in the spouse’s name so the value of the policy will be subject to an estate tax should the spouse also die.

Crummey Letters

No, they’re not letters that are poorly written (though they can be). Crummey letters are letters stating that a portion of money put into an ILIT can be constituted as a gift. As policy owners are only allowed to gift $12,000 a year to those who qualify to receive a “present interest” gift, the owner can filter money to the ILIT to help pay off premiums. The Crummey letter, named after the 1968 court case with Clifford Crummey, states, in writing, that money has been put into the ILIT and can be accessed by family members. Normally, the money is not truly accessed until the policy owner dies.

Basically, ILIT’s and Crummey letters have set up legal loopholes so beneficiaries won’t be heavily taxed upon the death of the policy owner. In some cases, this taxation can amount to hundreds of thousands of dollars. As Crummey letters and ILIT’s are strict legal documents regarding a large amount of money, it’s a good idea to have them looked over by a lawyer and/or an accountant. These types of policies can use some dry and inscrutable legal language.

Inheriting ILIT’s

Keep in mind that only a portion of the estate can be passed down via an ILIT. If this wasn’t the case, a family could keep passing down the ILIT ad infinitum. Only a portion of an estate can be held within the ILIT. Still, this is a sizable amount compared to the taxation on a full estate. If you are at all concerned about estate taxes after death, an ILIT makes a lot of sense compared to the alternative of setting premiums to pay off estate taxes in full.

Are Reversed Mortgages A Good Idea For You?
Posted by David Schneider

What’s a reverse mortgage? Many homeowners have not even heard of such a thing. The reason that many homeowners have not heard of a reverse mortgage is that it is only available to a select number of borrowers, namely homeowners 62 or older who have built up a significant amount of equity in their home. If you qualify, a reverse mortgage can be highly attractive.

Unlike a traditional mortgage that borrows off equity, such as a home equity loan, a reverse mortgage does not require any other monthly bills. Instead, the mortgage is paid on the backend, when the homeowner dies, sells the home or moves. The caveat is that the equity in the home must be more than the amount of the loan so that the loan will be guaranteed to be paid in full when the house is sold.

Types of Reverse Mortgages

There are three major types of reverse mortgages. Single-purpose reverse mortgages are issued by state or local agencies, as well as non-profits. HECM mortgages are federal issued reverse mortgages offered by the Department of Housing and Urban Development (HUD). Finally, it is also possible to get a reverse mortgage from a private lender, called a proprietary reverse mortgage.

Single-purpose reverse mortgages are generally cheaper than HECM’s or proprietary mortgages, but they are not offered in every state. In addition, one of the major selling points of reverse mortgages is that there is no limit on how the money can be used. This is not the case for single-purpose mortgages, which require that homeowner use the money for home improvement or similar project.

HECM and proprietary mortgages are more expensive upfront but the money can be used for any purpose. In addition, they are easier to secure anywhere in the country. As such, they comprise the bulk of reverse mortgages that are secured every year.

How to Choose a Reverse Mortgage

So how can you choose the best reverse mortgage for you? It’s important to keep in mind that even HECM will be issued through a private lender, so you can shop around for reverse mortgage deals between lenders. Mortgage lenders will have varying upfront fees for both HECM’s and proprietary reverse mortgages, so make comparisons between different lenders as well as the different types of policies.

Generally, the higher the value in your home, the more you can borrow, especially if you have built up substantial equity. In addition, if you intend on living in the home for several years in the future then a reverse mortgage makes sense. If you plan to move within the next couple of years, the upfront costs for a typical reverse mortgage might offset what you gain in a cash payout. By and large, reverse mortgages are for those homeowners who will live out their retirement in the same house, though this is not the case across the board.

It’s important to realize that the interest on reverse mortgages will increase over the years. If the amount that is owed on a reverse mortgage is not covered by the sale of the house, you could be leaving a difficult legacy for your heirs. This is why it is especially important to comparison shop for reverse mortgages to find the best deal possible, so your descendents will not have to absorb the cost of the mortgage.

10 Cheapest Home Markets In The US
Posted by David Schneider

If you’re looking for the ten cheapest home markets in the U.S., you have some cards stacked against you. Basically, home prices went up across the board during the housing boom. So, if you are looking for a cheap home market, mostly you’re looking for a market that did not go up at the same rate as other regions.

If this is the case, it’s probably true that cheaper also means less desirable. The recent housing boom centered on many newly discovered neighborhoods that are now hot property. Take, for example, the Silverlake region in Los Angeles. Not too long ago, around a decade, it was an undiscovered neighborhood. Today it is one of the chicest, most sought-after neighborhoods in all of California. If you’re looking for a cheap home market in Los Angeles, you’re going to have to buy a house in a less desirable area that may be years from becoming hot property. This is true too for other regions throughout the U.S.

Finding Cheap Home Markets in the U.S.

When seeking out cheap home markets, there are two different factors. First, you should look into homes that are valued within your price range. Second, you should look at lower-cost homes that are appreciating at a significant rate. This is the best of both worlds: homes that are still cheap, but will be more valuable within the years to come. All homes appreciate to some degree, but some regions appreciate faster than others do.

In addition, you must look at a variety of other factors: the average mortgage for the area and the median income. Put those two figures together and you can calculate the percentage of monthly income that goes to mortgage payments. For the most part, this figure should be under 20 percent. When setting up a mortgage, try to keep the percentage of monthly income lower than this number.

The 10 Most Affordable Home Markets

OK, here they are: Augusta, Ga., Wichita, Kan., Little Rock, Ark., Baton Rouge, La., Birmingham, Ala., Oklahoma City, Okla., San Antonio, Texas, Tulsa, Okla., Syracuse, N.Y. and Youngstown, Ohio. For homes in this area, the national average for mortgage costs is as much as $425 less than for mortgages in more exclusive neighborhoods.

These areas don’t just comprise affordable homes, but larger homes for less money. If you’re relocating to one of these regions or you’re a current resident then you’re in luck. Homes in these areas are well priced for the quality of homes. A two-story home in Oklahoma City could go for $1 million, or more, in one of the country’s more expensive regions.

Keep in mind that affordable doesn’t mean decrepit or run-down, or even “up and coming,” as is the case with some L.A. neighborhoods, the country’s most expensive market. A market such as Baton Rouge, La. possesses homes that are the fastest rising in value, while still being affordable for the area’s average monthly income. As such, it is highly attractive to new homeowners, as these homes can be a safe and significant investment.