#insurance #HomeRepairInsurance #CarRepairInsurance #IDTheftInsurance
In the history of insurance, policies covered driving, home ownership, health and life.
Now, we have insurance for home appliances, car repairs and identity theft.
In ads for home-appliance and car-repair coverage, the actors talk about how much money they saved. Yet, there is no mention of the coverages’ costs.
So, one has no way of knowing how valuable that coverage is.
In advertising parlance, the ads are not trying to sell you the value, they are only trying to get you to call, or go online, for more information.
The ads make one wonder whether explicitly detailing the cost AND benefits would make the products economically not viable.
Insurance is a tricky business. Insurers have to constantly balance profit and losses.
Why do insurance stocks go up AFTER natural, or even man-made disasters? Investors figure the companies have already calculated the losses, but they now have the excuse to raise premiums for everybody.
Health insurance is a somewhat different animal. When it was first created, health insurance was only designed to cover catastrophic illness or injury. As companies tried to lure employees, or, perhaps, avoid giving raises and instead compensating with benefits, health insurance evolved into covering day-to-day medical treatments, prescription drugs etc.
When at one time a primary care physician could charge, say, $10 for a visit, those visits now costs hundreds. Certainly, medical staff salaries and other costs have risen, but having insurance to pay for those things likely contributed to rising costs.
Later, some employers decided to self-insure their employees’ health, thus paying care providers directly and avoiding insurance company profits.
Now, health care costs have risen to the point that fewer employers are offering it as a benefit. And, trying to get individual health insurance has become cost-prohibitive for many folks.
So, innovators – mostly for non-profit organizations – invented health–sharing networks, a non-insurance product that allows people to contribute regular share payments based on their personal situations, and get some or all of their health care bills paid. These networks usually don’t take a cut of those payments for themselves, and the good ones also negotiate individual health-care bills to reduce them.
Talking about the latest insurance products, one has to wonder how much one has to pay to cover auto, home or appliance repairs.
To use round numbers, if you pay $50 per month for the coverage, that’s $600 a year. Most major car repairs are well into four figures, so it could be economical for the policy holder. One covered repair could be more than the premium.
But if you have no car repairs in that year, you’ve spent $600 and gotten nothing back. If you go years without a major car repair, you’ve paid premiums with no return.
One has to wonder whether a person who cannot afford an expensive car, home or appliance repair can afford paying premiums with no return.
It’s admirable that innovators are creating products that attempt to make one’s financial life better. But, before buying one of these products, it’s best to do some math to see whether it will be worth it in the long run.
Peter
Tag Archives: insurance
PREPARE FOR COSTLY REPAIRS
#HomeRepairs #MoneyForHomeRepairs #RainyDayFund
It’s been said that if your (pick one: car, refrigerator, heating system) breaks down, you’ll always find the money to fix it.
That is true as long as you are prepared financially.
Erica Lamberg discussed preparing for costly home repairs in an article for GOBanking.com. It was also published in the Nov. 13, 2017, edition of The Atlanta Journal-Constitution.
Some people have a rainy day fund for such things. Others, who are not prepared, have to do without until they can come up with a way to pay for the repair.
As one can attest, it’s tough to live more than a few hours without your car, refrigerator or heating system.
Lamberg also talks about unexpected roof repairs. As she advises, though a roof is supposed to last 30 years, don’t wait that long to take preventative action. “A new roof, for an average-sized home – using medium-priced asphalt shingles – can cost at least $5,000 in most parts of the country, assuming that the sheathing is still sound,” Lamberg quotes Timothy G. Wiedman, a retired professor of management from Doane University in Nebraska.
She writes that Wiedman, who has bought, maintained, upgraded and sold several homes, said homeowners would be wise to start putting $600 to $700 a year into a roof replacement fund.
As for your heating system, Lamberg advises regular maintenance by a good local HVAC contractor. Twice a year, at the beginning of the heating and the beginning of the cooling seasons, is recommended.
“The proactive approach of being ready for the eventual changing of your equipment will save you money,: Lamberg quotes Gene Amick, with Climate Control Heating near Kansas City, Mo.
There are a number of things around your home that wear out over time. Sometimes, just regular maintenance helps prolong the life of those things. Other times, as in the case of your roof, or perhaps, your refrigerator, it’s best to have a fund that you can tap when replacement time comes.
Sometimes, having an income source that can help you pay for those things is warranted. There are a number of ways out there to earn extra money without having to get another traditional job, or begging your boss for raises. To check out one of the best – and you may find ways to save on new appliances and cars, too – message me.
Avoiding unexpected breakdowns is not just a money issue. It involves paying attention to things. The easiest way to get financially hammered by an unexpected repair is to ignore things. If you have a storm, particularly a hail storm, have your roof inspected. If you are lucky enough to have a good homeowner’s insurance policy, you might be able to get that new roof paid for.
Have your car regularly maintained. Regular oil changes over several years are cheaper than buying a new car. A good rule of thumb for vehicles is not only to get regular maintenance, but also to do the math on repairs. If the repairs become too frequent and expensive, a new car may be in order.
Most people do save for new cars, and plan their new-car purchases. But for those unexpected breakdowns, make sure you have a fund to cover the repairs.
Don’t let unexpected household repairs or purchases break you. Plan ahead. Have a source of funds readily available so you don’t have to do without for too long.
Peter
INSURANCE BUSINESS CAN BE MESSY
#insurance #healthinsurance #riskmanagement
The insurance business can be messy and complicated.
Some insurance is mandated. For example, a minimum amount of auto insurance, usually liability insurance, in case someone else gets hurt, is required in most states.
Health insurance, under the Affordable Care Act, is now mandated. We can certainly debate the necessity of that – perhaps later.
Life insurance may be the only one that is completely optional, meaning it’s not mandated and many people can live without it.
But even if insurance isn’t mandated, it may be – or should be – something we can’t really live without. When a person doesn’t buy flood insurance because it’s too expensive, but lives in a flood-prone area and gets flooded, many thoughts crowd her mind, and the minds of others watching. Those others watching may want to help, but may cringe at a Go Fund Me request to help HER. They might prefer to help the responsible folks take care of necessities that their flood insurance may not cover.
As for health insurance, the business model may seem complicated.
All insurance business models are about “risk management,” which may seem like a vague term to most, but we’ll use health insurance as an example as we break it down.
The health insurer collects premiums from folks who are healthy, and not making any, or are making very few, claims. When a person gets to a point in his life that he needs to make perhaps significant claims, those premiums he paid all those years may not matter.
The insurer will use all kinds of gimmicks, technicalities and even trickery to find ways to either not pay a claim, or pay as little as possible. They may often put consumers, already dealing with what ails them, through an incredible process to get their money. The more daunting the process, the more likely people will give up.
Remember this: just as consumers don’t like to be put through a wringer to get what they are owed, the insurers don’t like to be pestered day in and day out, either. The rule of thumb: if your policy says you are covered, fight for what you are owed. If the company doesn’t pay, sue.
Then, we have the standoffs between providers, usually big providers who may be the only game in town, and insurers over fees, reimbursements etc. You see insurers use their leverage to give the least to the provider, and you see the provider using its leverage by not taking the insurer’s policyholders as patients.
Remember, an insurer’s promise of coverage with your provider is made to be broken. In standoffs like these, the patients (policyholders) suffer and no one cares.
New York Times columnist Paul Krugman wrote that despite the exit of some big insurers from the Affordable Care Act marketplace, the law is working well, reducing the number of uninsured Americans considerably. His column was published Aug. 22, 2016, in The Atlanta Journal-Constitution. Though some insurers’ exit from the marketplace is a concern, Krugman says the problem can be fixed if people can learn to work together to do so.
The U.S. is the only major nation in the world in which health insurance is left up to the free market. Some advocate that we move to the single-payer system, in which we’d all have health insurance through the government. There are pitfalls here, too.
The insurance industry provides many, good-paying jobs. Many of those would be gone in a single-payer system. Drug and device companies rely on their U.S. profits for much of the money that goes to researching new and better treatments.
What to do? Determine what insurance you need and buy it. You may have to give up some pleasure and deal with some messy situations along the way, but going without can create far worse consequences. Remember the Fram Oil Man ads: pay me now, or pay me later.
If you are having trouble paying your premiums, look for other ways to make money. There are many part-time options out there that could even give you enough to surpass your main income. To check out one of the best, message me.
Insurance is messy. You may have to shop around frequently for the best deal, but paying penalties, or just taking the risk that you won’t need it, is a recipe for disaster.
Peter
CHANGE ISN’T ALWAYS WHAT YOU WANT
“You must be the change you wish to see in the world.” Mahatma Gandhi
Today, more than ever, change is constant.
Sometimes we see it coming. Often, we don’t. Regardless, we wonder what we could have done about it, presuming the change isn’t good.
Some things are beyond one’s control. Some things are totally within one’s control.
If change is beyond one’s control, how one responds to it is totally within one’s control.
One certainly can’t control the weather, and, as this is written, weather is severe in some parts of the United States. We can control how we prepare for and respond to severe weather.
Have you been through some change lately? If so, how are you dealing with it? Are you trying to reconstruct the past, or are you figuring out your place in the future?
Are you expecting change? What are you expecting? How do you feel about it? Is it going to help or hurt you? Most importantly, what are you doing now to prepare a response?
Are you expecting no change at all for the foreseeable future? Don’t be blindsided. Change IS coming. You may not know what the change will be. Therefore, you have to think of the worst change that could befall you, and prepare your response. What if you lose that job you think you are so secure in? What if your spouse walks out on you? What if there is an unexpected death close to you? What if YOU die?
All of these things will require a response. The good news: you can prepare a response in all these scenarios. At the time of the change, emotions will run high. That’s no time to think about how to respond. We don’t want things like these to happen, but they could – and they might. There are many prudent actions to take BEFORE they happen. Have a plan. Write it down. Have appropriate financial safeguards in place. Have appropriate insurance – yes, that goes for health insurance, even if you are young. Insurance is an investment, even if you don’t use it right away. Penalties are throwing money away.
Remember, in regard to your job, company ownership can change. You can get a really bad manager. Companies also reorganize a lot more frequently than in the past, because of changes in the marketplace, technology etc. Even if you have a great job, and are good at it, any one or more of the above changes could kill your career. How do you prepare to unexpectedly leave your job?
You can be a good saver. That certainly will help. You can be a very careful spender. Remember that money you don’t spend stays with you. However, remember the difference between being “cheap” and being frugal. (See health insurance vs. penalty above).
There are ways outside of a job to generate income. For one of the best, visit www.bign.com/pbilodeau. It may be something you’d never thought of, but getting into it while you have an income – and before you really need it – could pay handsome dividends if the worst happens. Heck, it could pay big dividends even if the worst doesn’t happen.
Harkening back to Gandhi, you may not like the world as it is. You may love the world as it is, but don’t expect it to stay that way. If it does, that’s your good fortune, since you can’t control “the world.” In either situation, there are things you can do to make the world a better place, and secure your place in the future.
Don’t let circumstances beat you. Prepare for the worst and expect the best. You will be so much better for it.
Peter
INSECURITY BEGETS A SAVINGS MENTALITY
Imagine living with such fear that a recession, an illness or bad weather could bankrupt you.
Some Americans live that way now, as do many around the world. But a few decades ago, nearly every American felt that insecurity.
New York Times columnist David Brooks, in a June 2012 column, says although the nation needs to reduce its deficit, Americans don’t really want to. Despite the political bluster, Brooks says, solving the real problem of reducing debt is fraught with political peril.
The current generation of Americans has been led to believe that debt is not a problem. They live on borrowed money, via credit cards, all the time, and think nothing of it. There is always insurance to take care of the big expenditures. Buy now, pay later. Or, pay a small premium and live without fear.
Before the plethora of insurance products, before credit cards became actual currency, Americans always lived in fear of that big event that would either kill them, or leave them penniless. The only way to postpone the inevitable was to save their money. That meant giving up a lot of things one might want, and even some things they need. People would die because they could not afford the treatment that would save them. Secure families were wiped out by drought, tornado or hurricane. There was no insurance, only self-insurance.
Even the staunchest deficit hawks don’t want to see EVERYONE, except for the very rich, living on the edge through no fault of their own. They even want room to save the irresponsible from themselves. But to do that costs money. Hence, we have a debate about government spending vs. over-taxation.
GOVERNMENT SPENDING IS DROPPING
Let’s frame the debate in reality. First, as economist and New York Times columnist Paul Krugman preaches, government spending IS decreasing, mostly at the local and state levels. Those budgets are getting balanced off the backs of teachers, firefighters, police officers and other government workers who are losing jobs at a rapid rate nationwide.
As we try to get more people back to work, every teacher, firefighter, police officer and other public worker who gets laid off ADDS to the unemployment problem. Think of what bigger cuts in government spending will do to unemployment. Would such cuts enhance the private sector to the degree that it could absorb all those government workers – plus a good number of those public and private employees already out of work? Common sense would say, probably not. That’s not even considering the PRIVATE businesses that might close as GOVERNMENT cuts more spending.
We do need to get government spending under control. We do need to get our national debt down. We need NOT to be indebted to foreign creditors, even though many of those creditors NEED a vibrant and free-spending U.S. to prosper themselves.
We see what Brooks was talking about when he referred to debt solutions as politically unpalatable. Many Americans love the idea of debt reduction, until it hits their own lives. Generations past were willing to risk everything – or at least they were FORCED to risk everything.
Today, there are things in place to cushion such risks. No one wants those cushions to be taken away, but we still have to reduce our national debt.
As individuals, we need to get our own houses in order FIRST. Eliminate, or reduce, unnecessary debt. The first rule: if you are buying something that will last years, it’s OK to borrow and pay back over time. If you are buying something to consume quickly, or in a short time, pay cash or don’t buy it at all.
The second rule: if you are a government worker, or have a private-sector job you feel will not last you as long as you want it, make sure you save as much of what you earn as possible. Then, establish a Plan B for income, so when your job disappears, you can walk out with a smile. For a great Plan B, visit www.bign.com/pbilodeau.
As for national debt, it didn’t happen overnight, and it will take time to eliminate. We have to do it in a way that hurts the fewest people. Everyone won’t escape unscathed. We will all pay for it in some way. But some ways are less painful, overall, than others. Let’s find those ways. Let’s not go back to the days when we were one uncontrollable disaster away from bankruptcy.
Peter