Life Insurance Part One: Myths, Misconceptions, and Fallacies

Life insurance products provide an essential role in a comprehensive risk management plan:  providing financial protection to those closest to you.  Life insurance products are offered by nearly every insurance company and are widely varied in their structure, design, and purpose.  We’ll dispel a variety of myths, misconceptions, and fallacies regarding life insurance in our first part of this installment series!

Myth 1:  “I’m too old for life insurance.”

What about final expenses?  According to aarp.org, the average cost of a funeral is $10,000.  The American population’s life expectancy continues to rise – which means that their nest eggs are usually exhausted and may leave the deceased party’s family responsible for final expenses.  Companies can write a policy with a death benefit as low as $10,000 (or lower).

Myth 2:  “I’m a tobacco user; therefore, I am uninsurable”.

Insurance companies continue to offer competitive rates to tobacco users – contrary to what many of our prospects believe.  Obviously, life insurance premiums are lower for non-tobacco users (another reason to quit!); but, tobacco users are able to find coverage at a reasonable rate.

Myth 3:  “I have no need for life insurance – I have my own nest egg.”

If you are proactively saving for retirement – congratulations!  It is a great first step to financial security during your golden years.  However, many unexpected events can happen between now and your retirement years.  Wouldn’t you prefer to have the peace of mind knowing that you and your family are protected?

Myth 4:  “I have been told that I’m unable to obtain life insurance”.

Good news – many companies offer what they call a simplified issue policy!  These policies are issued without any medical exams if you can answer ‘no’ to a few simple questions.  Not everyone is insurable; however, these products fill a large need for many individuals.

Myth 5:  “I am single and have no children.”

Yes, you have no direct dependents; however, that doesn’t mean life insurance would not benefit you.  Do you have a mortgage or debt?  Does anyone rely upon your income?  How will you pay for your final expenses?  Do you plan on setting aside any money for charity?  If you can answer yes to any of these questions, life insurance is beneficial to an individual risk management program and will avoid burdening any of your family members with your financial obligations.

**Important Note:  Most proceeds from a life insurance policy are not subject to probate or taxes.**

Life insurance can be utilized to serve various purposes and it’s important to determine what product fits your individual needs by discussing them with your insurance agent.  We will post part two to this installment series shortly to dismiss other misconceptions!  As always, please read policy forms for exact coverage.

Personal Auto Insurance: Liability Limits – How much is enough?!

When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the thing it was bought to do.  The common law of business prohibits paying a little and getting a lot – it cannot be done.”  – Unknown

 

Do you know what liability limits you carry on your personal auto policy?  Everyone is mandated by state law to carry liability insurance when driving a vehicle; however, few people know how much liability insurance they have or how much is enough.

Both producer and consumer are to blame for this issue – as it is both a lack of explaining by the producer and a lack of wantingto understand by the consumer.  The culture, processes and procedures of our industry play a large role in this problem as well.  Many consumers want an ‘apples to apples’ quote – and all too many producers are willing to fulfill that desire.  Many producers assume that the current or prior producer did his due diligence and that the liability limits on that customer’s personal auto policy are sufficient – a terrible assumption to make.

Be sure you have enough liability limits to cover damages that you could be liable for!

The primary responsibility – in my opinion – falls on the producer in this situation.  They have a fiduciary duty to act in the best interests of the client.  A knowledgeable, responsible producer should take the time and resources to determine what liability limits are appropriate for each customer and not take a ‘one size fits all’ approach.  The secondary responsibility is on the customer to listen and understand their coverage and be open to the suggestions of their insurance producer – realizing that cheapest may not be the best and that with liability insurance, you get what you pay for!

A separate blog post will define in detail liability coverage on a personal auto policy; however, it basically provides coverage if you were sued for damages (bodily injury and property damage) that you are liable for causing.  How much coverage do you need!?  Simply, as health care costs continue to increase, the need for higher insurance limits rise as well.  If you are liable for causing bodily injury, the injured party will incur health care costs that you are responsible for – it’s as simple as that.  The liability coverage afforded under your personal auto always has a per occurrence limit – this caps the amount the insurance company will pay for any one incident.  This limit should be enough to cover the majority of your personal assets.  If you are sued and your liability limits are exhausted – you could be personally sued for the remainder of the settlement, which puts your personal assets at risk.  In addition to damages, you’ll also be responsible for defense and legal costs – which can add up quickly.

An easy and cost effective way to protect your personal assets is to purchase a personal umbrella policy – which we always recommend.

Be sure to review your insurance policies at least once a year to evaluate whether or not you are properly insured.  It is critical that you listen to the advice of the insurance producer and tailor coverage to your specific needs.

Wisconsin Winter Weather: Ice Dams and your Insurance Premiums

Wisconsin presents many challenges to its year-round residents and although winter may be a little late in visiting this year, there is little doubt that Mother Nature will show up sooner rather than later. Wisconsin residents truly experience four different seasons during the course of the year – a spectacular event to witness as a resident.  Mother Nature’s miracles also provide numerous hurdles for homeowners.

Have you seen this before!?

Wisconsin’s winter weather comes in several shapes and sizes:  snow, ice, rain, sleet, hail, wind, etc.  However, one of the most common claims that we see due to winter weather are ice dams.  Ice dams can cause major damage to homes and businesses and are often signs of larger problems that exist.

First things first:  what is an ice dam?  An ice dam is a ridge of ice that forms at the edge of a roof and prevents water (melting snow) from draining off the roof.  The water backs up behind the dam and may leak into a home and cause damage to the walls, ceilings, insulation, and other areas.  The damage can be extensive – often times causing mold and mildew due to the moisture and wet walls/insulation.

What are signs of an ice dam?

  • Icicles hanging from roof eaves
  • Water dripping down or ice forming on the exterior surface of home
  • Ice is developing along the overhangs of the roof and/or gutters are filled with ice
  • Icicles forming on the underside of the roof
  • Water penetrating into home

So, what can you do to prevent ice dams?  Some suggestions are:

  • Remove snow from roof using a roof rake or a push broom
  • Make the ceiling air tight, ensuring that no warm, moist air can flow from the house into the attic space
  • Increasing ceiling/roof insulation to cut down on heat loss by conduction
  • Install sufficient soffit vents and adequate ridge vent for better ventilation

As always, if you witness signs of an ice dam – consult a professional immediately.

Ice dams are generally covered under a standard homeowner’s insurance form, so there is most likely coverage for a claim.  With that being said, ice dams are generally preventable claims.  By taking measures to prevent these types of claims, an insured is saving themselves money by not paying a deductible and keeping their claim activity to a minimum!  The less claim activity one has the more competitive rates they can obtain!

Feel free to contact us with any questions or concerns you may have – we’re happy to help!  As always, please read the policy forms for exact coverage.

Uninsured Motorist and Underinsured Motorist Coverage – Do you need it?!

Liability insurance is mandatory in the state of Wisconsin– along with most other states.  If you fail to drive without liability insurance you may face fines or even jail time.  If you cause an accident, it seems logical to assume that the liable party would be responsible for damages.  Liability coverage under your automobile insurance policy is most often thought of in regards to bodily injury and property damage.  This assumption is logical – however, there is another part of the liability coverage that is rarely discussed but equally important.

According to carinsurance.org, one out of every six drivers is driving without insurance (in WI, the rate is 15%) – quite a startling statistic.  If you were hit by one of these uninsured drivers and they injured you, then you would expect them (or their insurance) to pay for the damages.  What if they don’t carry any liability insurance?    Does that mean you are on the hook for all the damages that someone else caused?  No.  Your uninsured motorist coverage under your automobile insurance provides part of this coverage for you by paying for bodily injury damages sustained by a liable, uninsured motorist.  This also prevents you from having to pay any out of pocket expenses for health care costs (unlike health insurance).

Avoid headaches during a claim by being properly insured!

What happens if the person that is liable for damages has insurance, but not enough to pay for all damages?  Your underinsured motorist coverage under your automobile insurance provides another part of this coverage for you.  This coverage provides coverage for bodily injury when the liable party does not carry high enough liability limits to provide for the damages. Although only one in every six drivers is uninsured, countless more are improperly insured and may not carry high enough limits to pay for damages sustained in an accident – particularly with the rising costs of health care.

An important note regarding uninsured and underinsured motorist coverage:  it does not pay for property damage that is caused by a liable driver (i.e. damage your vehicle); it only pays for bodily injury.  Some carriers offer uninsured motorist property damage insurance, usually at an additional cost.  If you have the option to purchase it – we certainly recommend it!  If you don’t have this coverage and you get hit by an uninsured or underinsured motorist, you’d need to carry collision coverage on your automobile for property damage coverage to apply.

Uninsured and underinsured motorist coverage is an important part of a comprehensive risk management program; therefore, it’s important that you consult with your insurance professional.  Feel free to contact us directly with any questions or concerns you may have.  As always, please read your policy forms for exact coverage.