September 21, 2015
and featuring a Bonus Thought: Sometimes you don’t!
A friend of mine shared a listsicle signature line which made me chuckle. It’s supposed to be sarcastic reasons you don’t need life insurance because haha of course you do. It just makes a strong case for calling it When You Die Insurance because calling it LIFE insurance seems to confuse everyone, including the people who sell it.
Instead of being that know it all who tells someone their signature line sucks, I decided to be an adult and just blog about it. ;D
Six reasons you don’t need life (When You Die) insurance:
(According to the agent)
1. You are never going to die.
Ha ha ha … see that’s funny because it’s insurance for when you die. So you don’t need it if you’re not going to die! Get it?
The implication is probably that you’re going to keep working for the rest of eternity. But if you do die, I mean when you die, you don’t get to take this money with you. It stays here. Just sayin’.
2. You are going to inherit a fortune.
Inheriting a fortune is awesome and if you don’t blow it all, yes, that could replace your When You Die insurance. Let’s keep in mind this is not a good life financing plan because someone still has to die first and that’s just suspect as all get out.
3. You are going to win the lottery.
That’d also be awesome. If you win and don’t blow it all in a year, it’s possible this could be your When You Die insurance.
4. Your children are going to support you.
In death? Is this for zombies? Is this undead insurance for zombies? Hint: Life insurance isn’t for your daily expenses.
5. You are never going to retire.
Does an insurance for When You Die help with retirement? Again, if you have to be dead to collect, it’s not much good to you when you’re alive, you’re working or not. Life tip: Life insurance isn’t your retirement savings!
6. The government will take care of you.
Again, in death? What care do you need after you’re dead and buried / cremated / scattered at sea?
REAL reasons you need life insurance:
- You have minor or elderly dependents who would struggle with one-time or ongoing expenses upon your death, or pets who would need a home and/or require care.
- You have debt that would fall to your survivors to pay without your income: a cosigned mortgage, cosigned student loans, etc.
- You intended to support someone’s major life change like buying a home or though college, whether it’s your own child, that of your spouse’s, or even another relative.
- And your savings won’t cover any or all of the above options that apply to you.
Final answer: When You Die insurance is to cover your debt obligations and to help the living that you left behind, if they need it and you don’t have enough assets saved to cover it.
Therefore, another truth: You may not need life insurance!
If you’re single, have zero dependents whether of the 2 or 4-legged variety, no debt, and don’t intend to pick up any of these things ever? Or you’re married, no dependents, no debt, and the surviving spouse has a good career? Or you have any of those obligations but you have a LOT of savings? Then you don’t need life insurance! Imagine that. Leigh and Linda can attest to that.
At a certain point, if we grow our assets appropriately, we won’t need our life insurance to cover our debt and support LB and Seamus in the event that we both disappear from their lives and deprive them of our incomes. That’s all it is: a guaranteed income replacement for a limited period of time.
But your local life insurance agent would rather you didn’t think that.
January 19, 2013
I had a great conversation with twitter friend @neauxlah who shared her experience living through Katrina and subsequent hurricanes, and the insurance circumstances involved.
Disclaimer: Her experience discussed here are specific to Katrina so as she’s cautioned, many things may have changed since then. Having lived through a number of these incidents, Katrina was the worst. The most comprehensive information she’d found for FEMA wasn’t, unfortunately, available during Katrina. (I’ve updated the link from the “How you apply” page that won’t load to the Response Recovery page.)
First, meet @neauxlah: She’s lived in New Orleans for 14 years and been a resident of the Gulf Coast for most of her life. She’s worked in the insurance industry for six years and has another three years of experience in a law firm that handled all sorts of insurance claims. Both jobs taught her how insurance works, what coverages are necessary and more: she carries “ample coverage-renters, auto, medical, disability, etc and have never, ever had any problems with claims or payments.”
Her first few tweets caught my interest:
Flood Ins is a gov’t prog & is more every year to cover something that happens every 3-4 years.
(We) pay more towards our coverage so that we can use more of those Fed dollars.
As someone who received Fed aid during Katrina I had to pay that money BACK. With interest.
And of course, I wanted to know more, a lot more, about how it worked back then, more than could easily be tweeted. @neuxlah was kind enough to answer my questions:
If you have insurance you MUST recover from your insurance carrier FIRST before FEMA will even consider you…
Recovering from your insurance carrier in regards to flood/homeowners ins is an ongoing process. It takes a LONG time.
Q: Is hurricane damage is covered as part of regular insurance or does it have to be purchased as an additional rider?
A: Hurricane damage is a part of regular insurance but it has a separate deductible. It could be a flat of say $2-5,000 or it could be a percentage of the damage.
Also, most insurance companies won’t cover wind and hail damage in this area anymore and the majority of home and business owners now have to obtain that coverage through the insurer of last resort: Louisiana Citizens. Most states have an insurance organization like Citizens. They are always more expensive then a regular insurer.
Q. What’s the average or usual amount of time you should expect to put into the paperwork? And then how long does it take to get the money back from insurance?
A: The amount of time can vary depending on the insurer and the natural disaster. Most require that some form of payment be issued between 15-30 days from the date the claim (loss) was filed. However when it is a very large and catastrophic loss all of that goes out of the window. Ex: I didn’t receive any actual FEMA aid (a loan) until December and Katrina happened in August.
*Note* If you are unable to live in your home/apartment most policies cover housing. Those payments are issued fairly quickly- usually less then a week. But payments for actual losses can take much longer.
After you have exhausted all your ins THEN you can ask for assistance from FEMA in the form of a LOAN.
Q: Is there a period of time during which you must apply or do you have to prove you have exhausted the insurance somehow? Provide a letter from insurance?
A: Yes, there is a time period, usually a year or two from the date of loss, and yes, if you are a homeowner you do have to show proof that you have exhausted your insurance coverage first. That is relatively easy, though. If you manage your insurance online you should be able to print out proof of your policy limits as well as proof of payments towards your loss (or claim).
Q: What’s the usual interest rate from FEMA? How long is the loan typically good for? Do you get to apply for a variety of loan type? (ie: any kind of amount, length of time, etc?) Do you have a grace period to pay it back once your insurance comes in?
A: FEMA loans are made through the SBA and at the time I had my SBA loan my interest rate was around 3%. My loan was very small in comparison to most people and I had to re-pay it in six years vs their repayment agreements. I received my loan in November 2005 and my repayment didn’t begin until December 2006. This wasn’t a problem for me because once I received my insurance payment I just paid SBA back.
IF you don’t qualify for a loan then yes, you can apply for grant assistance. It is NOT easy, and it is NOT overnight..
FYI-most people qualify for the (low interest) loan. you have to be damn near in bankruptcy to get aid.
Q: So after exhausting your insurance and after applying for a loan you can get assistance. Is this again one of those “prove you have no means” situations? You have to pull all your bank accounts or something?
A: No. FEMA/SBA will ask about other assets during the loan process and before loaning money for your actual property they will ask for proof of the amount of the loss and proof that you have exhausted all other coverages. But I was not asked to use all of my savings towards my property damages prior to obtaining the loan. One thing I JUST realized: when I obtained my loan I wasn’t working ( I lost my job due to the Hurricane). I had NO income and they knew that! Hmm. I can only assume because of the nature of Katrina, a lot of rules weren’t being enforced.
If you don’t have insurance you pay the loan back over a certain # of years.
You can get a grant after trying everything else but that’s like six months later. Six months!
Q: Is the grant the same as aid?
A: I would consider the grant the same as aid. As with the grant they will ask for proof of your losses and once they have obtained sufficient information, the grant will be processed. I know people who rented and did not have flood insurance who received aid. Most of them did not receive any money until December/January.
Thanks so much for taking the time to answer my questions, @neauxlah!
~~ ~~ ~~
One of the reasons I’m so interested in disaster insurance and the practical applications thereof is, I’m just a nerd like that.
The other reason is: we live in Earthquake City, Earthquake State. This isn’t as scary as it could be, I’m not a newcomer to this sort of thing. We lived on a major faultline right through my early 20s and were close enough to feel our fair share of the Northridge quake back in the day. Shakes and quakes were pretty normal in SoCal. But just because nothing ever took us out before doesn’t mean we’re invulnerable.
And then I learned more about insurance. Once I went through all the kinds of damages that regular insurance will not cover if caused by an earthquake, I realized: well shoot. Once we own property, basically no costs would be covered in the all too likely event of an earthquake.
PiC asked me whether we should drop our earthquake rider recently, because it’s pretty expensive in comparison to our regular coverage for home or auto.
To my mind, it’s not prohibitively expensive (feels like it, but it’s not) in comparison to the risks we’re protecting against:
Walls in damages;
Structural damage;
Cost of living if the home is unlivable during repairs;
Cost of replacing essential belongings and furniture should it be damaged or destroyed- there’s also a difference in whether the company will give you the amount it costs to replace or just the “value” of the item. In the case of furniture, we have high-original-value, low-replacement cost items in the insurance’s view. We would need to opt for full-replacement-value in order to be able to afford them again. Especially since they were almost all good opportunity buys: from Craigslist or last season clearance sales.
If we have enough money to easily replace the majority of our belongings without breaking a sweat, or enough assets to cover the cost of repairs and living expenses, then I don’t see a problem with self insuring. But until then? I’d like to have that insurance for its original purpose: protection against risk of loss.
Does anyone else live in an area where natural disasters are common enough you’d need to be insured separately? Or even when you can’t get insurance for such a thing?
Would you make a different choice about insurance?
July 30, 2010
That’s the rather steep fee I’ve been paying since the summer of 2009 (last year). The reason I took that pricing was because I got sick of dealing with price quotes during a pretty stressful layoff anticipation and it was so much easier to just extend my existing policy as a rollover plan.
Now that I’ve got an employer sponsored policy again, I’m wondering if it’s worth carrying both policies for a combined near $500K in coverage. I don’t want to become reliant on being employed to be insured – that’s why I was scrambling last year for an independent policy. But is it worth carrying this much more expensive policy for yet another 3 months at $150 for the privilege of being lazy?
March 30, 2010
My experience with Peninsula life, and canvassing people who live in the specific area that I’ve moved to, all said: get your own car. While I could have borrowed a car for most simple runs, that car is a manual transmission and I’m not comfortable enough in it yet to drive without a whole lot of adrenaline-nervosity. (I don’t know about y’all, but the fear of hurting someone else‘s car is nerve-wracking.)
On bad joint days, I would never be able to handle a manual. They don’t happen as frequently as before but when they do, I’m out of commission.
Stacked with the managerial duties that will call for unpredictable early mornings and late nights, I don’t fancy relying exclusively on the three-five transfer public transportation option. There will be times that it works out, but not always.
Don’t get me wrong: I love the lower overall costs of commuting via public transportation and did it for nearly five years in a region that isn’t known for good pub trans. But after creating a whole spreadsheet comparison, I’d either have to add 20-30 minutes of bus time ($) or drive half the round-trip commuting distance just to get to a transit station and add the cost of parking ($$). All told, I’d be spending just as much on transit as my driving commute would cost, and would not be reducing my driving footprint (that’s a terrible mix of terminologies).
Outside of the work commute, there are very few things that are within walking distance (less than 2 miles) and even when it is, the skies have been known to open up unexpectedly halfway through. And the wind blows the rain sideways. I’m a SoCal girl! I’m intrepid but you understand that I don’t have the luxury of changing multiple times a day to stay dry. We have to be a bit more life-practical than that.
As for the money…..
The car purchase will cost me $6800 out of pocket and another $900 for registration and sales tax. The insurance costs $550 per 6 months.
The total cash cost: $8250.
After using the tax money I’d saved and the tax refund ($5575), I owe my emergency fund $2675 and must add $550 every 6 months to my insurance fund.
It’s not the most frugal auto choice I could have made but it was a 6-year-old car in as close to mint condition as I’ve ever seen. That kind of quality is very hard to find in a used car in my designated age range.
I have a plan in place to recoup my Debt to Self through freelance work. If all goes well, I plan to do so in four months.
March 19, 2010
Michelle lit a fire under my butt with the suggestion to get my renters insurance in order. I hadn’t committed to a policy since talking about it in October for a very stupid reason: I was grumpy that my quotes were so high in comparison to everyone else’s. That’s just nonsense. I’m insuring a 3-bedroom house with two dogs and earthquake insurance in California; clearly I forgot I wasn’t comparing apples to apples.
But I’ve finally just bitten the bullet – I’ll be gone soon and won’t be here to take care of anything in case of theft, break-ins, etc.
With the following sage advice from my previous post
@Funny About Money: Be sure it covers full replacement value…that is, what it would cost to buy new stuff. Unless a policy specifically says that (and check with the agent to be sure what the wording means), the insurer may pay you only what it decides is the used value. And used furniture and clothing isn’t worth much, by anyone’s reckoning.
— My policy covers full replacement value.
@The Lost Goat: Make sure the plan covers your comic books … I have to get riders to cover my firearms, because they are not considered general household items. Expensive collectible things like firearms, jewelry, and stamps generally require riders (read: more money) if they are valued past a certain amount.
— A comic book rider will cost something like $15/$500 increment, well worth it. The interesting detail about the rider is that if a loss occurs just to the books, I don’t have to pay a deductible. They would simply pay out the claim in the amount insured.
I set up two policies
I’ve increased my required monthly contribution amounts to the Insurance Fund accordingly to make sure that I’m covered this time next year when the renewals come up. When I get the chance – honestly, probably in a month or so, I’ll rate-review again just in case another company had better rates. I don’t get a multi-policy discount anyway so there’s no real reason to be loyal to a single company if I can find comparable value and better rates elsewhere.
March 18, 2010
Does anyone have a safe deposit box for their important documents?
Now that I’m going to be more or less a denizen of California as a whole, and not just local to one or the other region, I feel even more nomadic than when I was just traveling during unemployment. I want to have a secure location to keep my birth certificate, passport, Social Security card, and eventually my will. (The will is still under construction.) It seems a little pretentious to rent out a safe deposit box for just those documents, though, and as though a fireproof, waterproof safe might be a better long term choice.
Until I called the bank, I had no idea the boxes were so expensive, so I’m a bit put off by it. I’d love to hear some arguments for or against the whole idea. Or alternative solutions I’ve not yet considered, even.
November 16, 2009
This year’s updated Comparison of Medical Coverage and 2010 COBRA rates have been published, and the results are not pretty at all.
Hitting the highlights of the changes:
Office Visits
Before: $20 copay
After: $25 copay for primary care; $40 for specialist
Comment: I only see a specialist, so this is a major uptick in cost. 100% increase in cost; $100 v. $200 for 5 visits a year.
Prescriptions
Before: $15/generic and $30/brand name for a 100-day supply
After: $15/generic and $30/brand name for a 30-day supply
Comment: With 2-3 prescriptions going at any given time, we’re looking at 200% increase; $157.5 v. $540
Routine Eye Exams
Before: $20 copay
After: $25 copay
Comment: I’d probably skip this if my meds didn’t carry a risk of eye damage. Not worth skimping on $5. 25% increase; $20 v. $25.
Eyeglasses/Contact Lenses
Before: $125 allowance every 24 months for eyewear purchased from HMO
After: $125 allowance every 24 months for eyewear purchased from HMO NONE. No coverage at all.
Comment: It’s a darn good thing I’ve already replaced my reading glasses and only rarely need them.
HMO Monthly Premiums
Before: 324.82
After: 352.98
Comment: 9% increase on top of doubling and tripling my copays, and nearly killing off the vision care benefit. When ARRA expires and I’m paying the full price, we’ll be looking at an additional $28.16/month.
Dental Monthly Premiums
Before: 49.18
After: 51.90
Comment: 5% increase with no stated changes in coverage. To be fair, I have not been particularly on the ball about researching this area. The summary of benefits provided on the website is here:
The maximum annual benefit paid under the Dental Plan is $1,500 per each covered person. There is no deductible for services at the Employer School of Dentistry and a $50 per person deductible ($150 for families of three or more) for services at any other Dental provider. When you use a Plan dentist (about 93% of dentists in California), the plan pays eligible, reasonable and customary dental expenses as follows:
- 100% (no deductible required) for diagnostic and preventive services, such as exams, cleanings (up to two times in a calendar year), fluoride treatment, and space maintainers.
- 80% for basic services, such as oral surgery, fillings, endodontics, periodontics, and sealants.
- 60% for major services, such as crowns, jackets, fixed bridges, and dentures.
- 50% for implants up to a lifetime maximum of $1,500.
If you use a non-Plan dentist who charges more than Plan’s allowance for service, you must pay the additional cost. Under the Plan, you also may use the services of the Employer School of Dentistry (including the faculty practice). At the Dentistry school, you get 100% coverage of most expenses and a 50% orthodontia benefit ($1,500 lifetime limit).
So if I were willing to travel 50 miles into the city and use the Employer’s students, I could save quite a bit. $50 right off, and then up to $200-300 if I have to have real work done beyond the basic cleaning.
Summary
My ARRA [temporary discount on COBRA rates] expires in March 2010, and if I’m still with this HMO, I should expect to spend no less than $3500 in premiums alone, and another $800 in routine check-ups and prescriptions through 2010. Going without medical coverage is pretty much not an option for me so I’ll either have to continue with this coverage in the absence of an employer-sponsored plan or research individual health plans. *shudder*
