Pros
and Cons of Term Life and Cash-Value Policies—No
Plan is Perfect!
Con:
Cash-Value Policies are more expensive than
term life.
Pro:
Cash-value policies remain in effect as
long as you pay your premiums.
Con:
Cash-value policies are not an excellent
investment vehicle—you could do better
putting money into a mutual fund.
Pro:
Term life pays sufficient benefits to insure
financial security for your family.
Con:
Term life may not be renewable when the term
ends.
Pro:
Term life is available from many insurers.
Con:
New term policies (if you can get one) will
cost more.
For
instant life insurance quotes, visit:
Ø www.quotesmith.com
Ø www.insweb.com
Home
Insurance—Protect Your Biggest Investment!
If your home were destroyed or damaged due to
fire or your home contents were damaged or stolen,
you would most likely NOT be able to replace
everything all at once. If you were sued for
an injury or damage caused by you or your property,
the cost of defending that suit could run into
thousands of dollars just for legal fees - regardless
of the outcome of the suit. These situations
are usually covered by your homeowners policy.
With the proper policy, you can rest assured
that you and your assets are protected in the
event of an accident.
Additionally, homeowners
insurance is required by mortgage companies.
No mortgage company will lend the large amounts
of money needed to finance homes at today's
prices without requiring an insurance policy
to protect their investment.
When you insure your home,
you are really insuring:
THE
STRUCTURE OF YOUR HOME
Ø
REPLACEMENT COST - Insurance that pays
the policyholder the cost of replacing the damaged
property without deduction for depreciation,
but limited to a maximum dollar amount. This
maximum dollar amount depends on your policy
coverage.
Ø
EXTENDED REPLACEMENT COST - An extended
replacement cost policy, one that covers costs
up to a certain percentage over the limit, may
be purchased instead of a guaranteed replacement
cost policy. This gives you protection against
such things as a sudden increase in construction
costs due to a shortage of building materials.
Ø
ACTUAL CASH VALUE – This is coverage
under which the policyholder receives an amount
equal to the replacement value of damaged property
minus an allowance for depreciation. Unless
a homeowners policy specifies that property
is covered for its replacement value, the coverage
is for actual cash value. This is important
to consider when selecting your policy.
YOUR
PERSONAL BELONGINGS
Ø
REPLACEMENT COST COVERAGE - Coverage
that pays the dollar amount needed to replace
damaged personal property. The coverage will
replace items with like kind or quality without
deduction for depreciation. This is good coverage
to consider. If your possessions are destroyed
in an accident, you can receive the same or
similar items that are new. If you have a stereo
that is 12 years old and only worth $100, it
will be replaced with a new stereo with the
same features (i.e. tape player, CD player,
etc) regardless of whether the new price is
over $100.
Ø
ACTUAL CASH VALUE - Coverage under which
the policyholder receives an amount equal to
the replacement value of damaged property minus
depreciation. Unless a homeowners policy specifies
that property is covered for its replacement
value, the coverage is for actual cash value.
If your possessions are destroyed in an accident,
the insurance company will determine the value
of the items and reimburse you accordingly.
This is a gamble. If you have a stereo that
is 12 years old but is still completely functional,
the insurance company may only decide to pay
you $100 even if the cost to replace it is $500.
The company will determine a fair market price
for your items, regardless of what they are
worth to you, and regardless of what it will
cost to replace them.
Special
Types of Homeowner’s Insurance
Depending on where you
live in the United States, it may be necessary
to obtain additional insurance. For example,
if you live in California, you may want to consider
obtaining earthquake insurance. Most policies
do not cover earthquake damage unless you have
this additional coverage. Florida residents
would consider buying flood insurance due to
the high risk for hurricane damage. Some mortgage
companies will require that you obtain this
type of insurance if you live in a high risk
area. Check with your local insurance agent
for details about your risks for earthquakes,
floods and other area-specific natural disasters.
Taking
Inventory—Get out Your Pen, Paper, Calculator
and Camera!
In order to obtain an
appropriate policy for your home, you’ll
need to take an inventory of your possessions.
www.iii.org
offers an easy-to-use worksheet which will help
you take stock. It’s important to record
model numbers, serial numbers and any other
identifying features on your possessions. This
proves ownership in the event of a loss. Photos
are another good way to prove ownership. Take
photos of your possessions and store them in
a safe place. Photos that are stored in your
home will serve no purpose if they are destroyed
in a fire. Bank safe-deposit boxes are an excellent
place to keep your insurance paperwork.
If you are renting a home,
apartment, condo, etc, you must obtain renter’s
insurance to protect your belongings in the
event of a loss.
Items such as clothes,
furniture, televisions, bicycles, jewelry, personal
computers, artwork and other items are not covered
by your landlord's insurance against destruction
or loss. If any of these items are damaged or
destroyed in a fire, flood, burglary, etc, you
will be required to replace them. While your
landlord will carry insurance on the property
itself (building, land, etc), you must protect
the belongings you keep inside the property.
What
Does Renter’s Insurance Cover?
- Renter’s
insurance protects you against losses from
fire or smoke, lightning, vandalism, theft,
explosion, windstorm, and water damage from
plumbing.
- Renter’s
insurance covers your responsibility to other
people injured at your home or elsewhere by
you, a family member or your pet and includes
legal defense costs if you are taken to court.
As with homeowner’s
insurance, you must take an inventory of your
possessions for renter coverage. This link
offers a comprehensive worksheet you can use
to list your personal possessions: www.iii.org.
If you have questions
about renter’s insurance, your landlord
or local insurance agent can help you. While
this coverage is not required, it is highly
recommended. Although you do not have to worry
about replacing a significant investment like
a home in the event of a renter loss, you will
need to replace personal belongings. These
expenses can soar, especially if you need to
replace the contents of your entire rented apartment,
home or condo.
For instant renter’s
insurance quotes, visit these sites:
www.insweb.com
www.quotesmith.com
