Last week, I received two letters from two banks reminding me of their complimentary offer of Accidental Death & Dismemberment AD&D insurance. It’s clear in both cases they’re marketing promotions trying to get you to buy AD&D insurance from their partners. However, the two offers are very different in how they approach the customer.

The first letter was from M&T Bank and they offered $1,000 of complimentary bank-paid AD&D insurance coverage through The Hartford. I had the option, but not the requirement, to increase that coverage up to $300,000 at the cost of $1.10 a month per $10,000.

The second letter from Bank of America was a little different. It stated that I could get “$10,000 of Permanent and Total Disability coverage for one full year, at no cost to you. *” The asterisk goes on to explain I actually get $1,000 of coverage per month for 10 months, which makes it a 10-month version of the offer from M&T Bank.

There’s one little catch to the Bank of America offer that isn’t a catch in the M&T Bank offer:

Coverage increases to $240,000 for $9.95 per month which is automatically billed monthly and remitted to National Union from your Bank of America checking account at the end of your one-year complimentary coverage period.

Ahhh, the 2009 bank version of a 2007 credit card marketing technique. Instead of $5 checks to customers who may unwittingly sign up for some service, Bank of America customers may be getting $1,000 AD&D insurance for ten months but put themselves on the hook for $9.95 in a year (or is it ten months?)… when they may have forgotten they signed up for this in the first place!

If you’ve been thinking about taking advantage of the free AD&D insurance, be sure to read the fine print to see what you’re committing yourself to.

(Photo: thetruthabout)

Beware Bank-paid Complimentary AD&D Insurance from personal finance blog Bargaineering.com.

One such person is reader Amanda, who recently emailed me to ask me about self-employed health insurance. I have done research on it in the past but with the current state of the economy, I think I should take a renewed look at self employed health insurance. So without further delay, how to find affordable self employed health insurance and then a brief discussion on why self employed health insurance is different.

How To Find Self-Employed Health Insurance

Before going it alone, you should always try to join a class. If you can’t join a class, then you get individual coverage.

The first place I would check is with a local trade association, chamber of commerce, or some other union in your geographic area.

Next, I’d compare it against insurance offered by the partners of the Freelancers Union. Freelancers Union is free if you meet the membership requirements. If you are a member of a warehouse store like Costco or Sam’s Club, look there as well (you might have to upgrade to a corporate/business membership to qualify) because they offer health insurance.

Finally, if you have to go it alone, one site I see referenced everywhere is eHealthInsurance. I ran a quote just now as a Male, 29 years old, non-student, and non-smoker. They were able to give a sampling of results in a few seconds. Here were some of the results:

• CareFirst BlueChoice Save $30/$40 – $172/month – HMO with $0 deductible, 0% coinsurance, with a co-pay on office visits of $30 for primary care physician and $40 for specialists.
• CareFirst BlueChoice HSA – $1,200 – $96/month – HMO with $1,200 deductible, 0% co-insurance, with a $40 co-pay after the deductible.
• CareFirst BlueChoice Comp HSA – $2,500 – $80/month – HMO with $2,500 deductible, 0% co-insurance, with a $0 co-pay after the deductible.
• UnitedHealthOne Copay Select 70 – 5000 – $67.43/month – Network with $5,000 deductible, 30% coinsurance, $35 office visit.
• Kaiser Permanente $30/$40 Plan – $155/month – HMO with $0 deductible, 0% coinsurance, $30 office visits
• CoventryOne 80% Choice PPO $1000 Ded – $100.94/month – PPO with $1,000 deductible, 20% coinsurance, $25 office visits
• UnitedHealthOne Saver 80 – $36.66/month – Network with $10,000 deductible, 20% coinsurance, no coverage on office visits

Legend: Read this post on health insurance plan types if you are unclear what the different. The deductible refers to how much you must pay before insurance kicks in. Coinsurance refers to how much you must pay after you’ve exceeded your deductible (so 30% coinsurance and a $1,000 deductible means that you pay 30% of costs over $1,000 and 100% of costs up to $1,000).

Why Self-Employed Health Insurance Is Different

When you work full time as an employee of a company, the health insurance company that covers that company must cover all employees that opt into the plan. If you’ve always worked as a full time employee and wondered what the big deal is with “pre-existing conditions,” it’s because it’s never been an issue for you. The insurance company is required to treat all employees as part of a “class” and cover everyone in that class, or cover no one at all. So you could have all sorts of pre-existing conditions and they can’t deny you coverage.

The system works because healthier employees, who pay more in premiums than they consume in services, subsidize less healthy employees, who pay less in premiums than they consume in services. In the end, the insurance company is hoping that the total they collect in premiums is around the same as the total they pay out in claims. They earn money on playing with the float, like investing and whatnot.

Self employed and individual health insurance is different, and subsequently more expensive, because you’re a class of one. You have no one subsidizing you but you are not subsidizing anyone else.

How To Get Health Insurance Cheaper

Since the name of the game in insurance is risk, you pay less if you assume more risk. So if you raise the deductible and raise the coinsurance, your monthly premiums will go down. If you lower either, your premiums will go up. The lowest price policy in the list above, the UnitedHealthOne Saver 80, had a $10,000 deductible.

A common strategy for self-employed individuals is to buy higher deductible insurances. The idea is to protect against the catastrophe, not the everyday bumps and bruises. If you have a $5,000 or a $10,000 high deductible health insurance plan, you’re doing just that. People usually save the difference in their emergency fund as a form of self-insurance.

Finally, I wish you luck. I was fortunate to be married to someone with health insurance options through her employer. If you don’t have that luxury, I believe the process I outlined above should result in something fairly affordable. If you have done this type of research and have know of good resources, please let us all know in the comments!

(Photo: tessawatson)

Finding Affordable Self Employed Health Insurance from personal finance blog Bargaineering.com.

The purpose of a home inventory is to document the personal property in your apartment or home so that, in the event of a loss, you can expedite the recovery process with your insurance company. It also can give you an idea of how much insurance to purchase, where too much can be as bad as too little insurance.

Your Home Inventory

There are many ways to keep and maintain a home inventory but they all need to satisfy certain conditions:

• What the item is – make and model information.
• When you bought it – to figure out the present value of the item.
• How much you bought it for – include the receipt if possible, this knocks out the “when” question too.

You decide how much information to collect. The more information have, the better. You can decide to only retain detailed information on the more valuable items, say $100 and up. It’s a decision for you to make but if you want to claim something, either on an insurance form or as a loss on your income tax return, you will need this information.

How to Store Your Inventory

How you keep and maintain your home inventory is up to personal preference, but here are a few options:
Video: The easiest way to maintain complete a home inventory is walk around your apartment or house and take a video of all the rooms. I find it’s easiest to take one video per room. This lets you give an individual name to each video file, rather than trying to figure out at what time you enter each room.

Make sure you highlight anything of value in the room (for me, it’s anything worth more than $100) by pointing it out and saying what it is. I own a Flip Mino handheld video camera so I used that. If you don’t have a video camera, your digital camera probably has a video record feature.

Photos: If you don’t want to or cannot take a video inventory, photos are probably even better because the resolution is sharper. Take a picture of the entire room and then a closeup of each item of value. Write the make, model, and other salient details on the back of the photo (or in the filename if it’s digital). Then organize the pictures by room with folders for the kitchen, the master bedroom, the living room, etc.

Home Inventory Software: In addition to video and photos, you can use software to help track your property. Some people prefer something simple like Microsoft Excel. Others download special programs that let you link up products with your photographs. Use whatever you feel most comfortable.

Update It

Finally, remember to update it at least once every six months, once a quarter if you feel ambitious. You can also update it as needed, such as after a big purchase. It’s a question of balancing your time and the detail of your inventory. The more detail you have, the better, but you may not want to spend hours a day on home inventory upkeep.

If you have a home inventory strategy you use that differs from this one, or particular insight I’ve missed, please let us all know in the comments!

(Photo: fleur-design)

Keep & Update Your Home Inventory from personal finance blog Bargaineering.com.

The easiest way to determine the total cost of ownership on a car is to turn to online calculators, like this True Cost to Own calculator from Edmunds.

If you’re curious just from an insurance perspective, Forbes has published a list of the least and most expensive cars to insure according to data provided by Insure.com. They quoted rates for a 40-year-old male who commutes 12 miles to work with your fairly standard insurance limits. $300k/$100k injury limits, $50k property damage, and $500 deductibles on collision and comprehensive.

If you’re curious, the average premium in May 2009 was $1871. The average in October 2008 was $1982, so premiums were falling.

Cheapest Cars to Insure

1. Hyundai Santa Fe (SUV): $832
2. Kia Sportage (SUV): $840
3. Hyundai Entourage (Minivan): $848
4. Kia Sedona (Minivan): $857
5. Kia Rio5 (Passenger): $857
6. Honda Odyssey (Minivan): $871
7. Smart fortwo (Passenger): $881
8. Saturn Vue (SUV): $911
9. Mazda Tribute (SUV): $913
10. Chrysler Town & Country (Minivan): $915

I skipped the most expensive cars to insure simply because people driving Dodge Vipers ($2446), Ford Shelby GT500s ($2186) and Nissan GT-Rs ($2533) probably don’t give a lick about the cost of insurance! Incidentally, the Nissan GT-R was the most expensive car to insure and four of the five most expensive cars were sports cars. The fifth was an SUV, the Mercedes-Benz G-Class, at $2088 a year.

Most and Least Expensive Cars to Insure [Forbes]

Cheapest Cars to Insure from personal finance blog Bargaineering.com.

In working for my how to buy term life insurance post yesterday, I emailed my insurance agent, Deborah from State Farm, to get some updated quotes on term life insurance. I’ve had the need to email her on several occasions and each time her responses were usually back in minutes. She knew me as Jim Wang, a recent new customer, and not as customer #XXXXXXX in a database somewhere.

It really underscored one thing I had missed when I was with Geico and Traveler’s, personalized service with a real person.

With Geico and Traveler’s, the process was very transactional.

• I talked to them about what coverages I wanted, then I bought it. Done.
• My car was totaled. I had no comprehensive coverage, I’m responsible. Done.
• I am switching insurance providers. They attempted to keep me, I said “no thanks.” Done.

There was absolutely nothing wrong with my relationship with Geico and Traveler’s. They were always responsive to me but I was just another number in their database. And I was fine being a number because my insurance was cheap and that’s what I needed.

When I reviewed my insurance policies earlier this month, I found that I could get the same insurance coverage for less from State Farm. Since then, the only “big” thing I had to talk to Deborah at State Farm about was when my wife was rear ended a week ago. She advised us on what to do, since my wife was not at fault in any way, and even checked in a few days later just to see how we were doing.

It’s that “check-in”-type of relationship that makes me appreciate going local for something as transactional as insurance.

I still had the 24-hour service touted by every other insurance company (have a problem, call the same number; if it’s after business hours then the call gets routed to their national call systems) but I also had a person I could talk to each time. More importantly, I could just email her if I had a quick question.

So, the next time you’re thinking about getting anything, whether it’s flowers or insurance, consider going local. You might be surprised to find it’s both cheaper and better. (Ironically, I found this local agent by using NetQuote, a national broker of insurance agents)

(Photo: cups)

Give Local Insurance Agents A Shot from personal finance blog Bargaineering.com.

I’m not an insurance professional and everything I wrote in this article is simply my opinion. I understand that I may have made some mistakes or misunderstood some things, so take what I write with a grain of salt. Insurance can sometimes be a confusing topic and I, like many of you, am learning it as I go along. If you do see anything inaccurate, please let me know so I can fix it!

How I Chose Term Life vs. Whole Life

There are four types of life insurance: term life, whole life, universal life, and variable life. My earlier article discusses what each one is. I want insurance to cover the catastrophic problems and I’ll self-insure against the every-day and more routine problems. I also like clear segregation between the various aspects of my life, which is why I want to keep my life insurance simple as well. Some life insurance policies have a death benefit aspect and an investment/annuity aspect.

My goal for life insurance is that I want my family taken care of in the event of my death. Nothing more, nothing less. We currently have one major financial obligation, the mortgage, and while my wife’s income could make the payments, it’s certainly made a bit harder with me gone. If I were to die before we pay off the mortgage, then I want the loss of my income softened with insurance. I’d say my death is pretty catastrophic, right?

Since I just want a death benefit and no fancy investment component, my main choice is term life insurance. The main difference is that term life insurance has a set term (number of years between one and thirty) and a set benefit ($X). You pay monthly premiums and should you die before the term is up, your heirs are paid $X. If you don’t die, they don’t get paid.

Why do some experts advise against whole life? Whole life insurance has an investment component and the main reason why people advise against whole life insurance is because you’re often overpaying in fees in that investment component. Whole life isn’t wrong for everyone, but here’s a SmartMoney article comparing term and whole life insurance.

Getting Life Insurance Through Your Job

Many employers offer free term life insurance as part of their benefits package. They offer basic term life insurance and then a supplemental term life insurance. For the basic, they usually pay for a policy that is a multiple of your base pay, so it’s a no brainer to accept that insurance policy (it’s free!).

Then, the supplemental insurance is something you can get if you want additional coverage. The nice thing about the supplemental life insurance coverage is that it’s guaranteed, you don’t need to get a physical to be approved. The not so nice thing is that it’s not subsidized, so you’re paying for it 100%. So, if you have health problems that would prevent you from getting life insurance otherwise, it’s a good thing if you want term life insurance.

Getting Term Life Quotes

So, since I am self-employed and I’m cheap, I don’t offer free term life insurance to myself. The next step is to start requesting quotes for $500,000 30-year term life insurance.

The issue of life insurance was first broached when I reviewed and changed our home and auto insurance policies to State Farm. When talking to the agent, I asked for term and universal life insurance quotes for our own edification. There are three insurance “classes” for term life insurance: Standard, Preferred, and Super Preferred. Each insurance company classifies the insured differently and as you move from Standard to Super Preferred, the premiums decrease.

Standard, Preferred, Super Preferred classes: You have to apply for life insurance, submitting yourself to blood work, physicals, etc. The results of those tests are then sent to the insurance company and they determine what class you belong in (if any). The classes differ from company to company. When a broker quotes you a rate, chances are it’s the Preferred rate.

The term life insurance quote for me was $54.83 a month for preferred term life insurance.

We have our starting point.

I turned to NetQuote, a site I first read about on Kiplinger’s, and within minutes had life insurance brokers calling me up with their quotes. What’s funny is that many of those brokers were using the same system, rattling off the same information, but the most informative and least salesy call was from MetLife. He gave me the following quotes (Preferred):

• TransAmerica: $42.00
• MetLife: $45.36
• AIG: $45.50
• West Coast Life: $45.50

Return of Premium Life Insurance: The MetLife rep also told me about a “return of premium” policy where you would get all of your premiums paid back to you in the event the term expired and you were still breathing. He gave me a quote from Lincoln of $76.13 for the policy (which was the same price as the non-return of premium policy from Lincoln). If I paid $76.13 a month to Lincoln, it would cost me $27,406.80 for thirty years of monthly premiums. Should I see the other side of 58, I would get all of the $27,406.80 back.

While appealing, would I be better served taking the $34 difference in premiums a month ($76 – $42, TransAmerica) and investing it? After 30 years, assuming 8% annual growth and $408 in annual contributions, the investment would yield over $46,200. Cut away 25% for Uncle Sam, and you end up with $34,650, which puts you ahead of the premium life insurance plan and you retain control of your money. (For those interested, the breakeven point is at an annual appreciation of 6.35%)

Summary

I won’t be getting life insurance just yet but I have learned that it’s important to start the process early because there’s an application process involved. At least with State Farm, there is a medical exam where a nurse would come to me (at no cost) to take blood pressure, urine sample, blood sample, and perform some other medical tests; a fifteen minute process. A telephone interview would also be included to determine past family medical history.

Have you purchased life insurance? If so, what kind and how was the application process?

(Photo: seandreilinger)

Researching Life Insurance from personal finance blog Bargaineering.com.

Actually, I take that back, I don’t hate insurance. I hate paying for insurance.

Every time I get an email from GEICO or a mailing from Traveler’s, I think about how I pay them every six months and, in the nearly ten years of driving and four years of living in this house, I’ve never filed a claim. At least with medical and dental, I get some regular checkups and routine cleanings (I hate getting a teeth cleaning but I love getting stuff for “free”). Don’t get me wrong, I’d still get insurance even if I wasn’t required to by law, but that doesn’t mean I enjoy paying for it!

So, once a year or so, I have an insurance review day. I get a little antsy and start asking for quotes from other insurance companies to see if I’m getting the best price. (Well, I’ve been more in the “or so” category, I haven’t done this in two years)

Auto Insurance

First, the baseline: We pay GEICO $462.30 every six months to cover my 2003 Toyota Celica and my wife’s 2005 Honda Civic. I have no comprehensive or collision insurance and she has $1,000 deductible coverages on both. Other than that, we have pretty standard coverages otherwise as required by Maryland law (100/300 Bodily Injury Liability, $100k Property Damage Liability, uninsured motorist, etc.). It’s pretty tough to beat that price because we also have a long time policy holder discount and a discount for being a member of an affiliated organization.

Candidate One: Allstate Insurance: I fire up the browser and point it to Allstate Insurance. One thing I don’t like about Allstate is that they have five different “packages” with a variety of add-ons like accident forgiveness and deductible refund. I really just wanted to know the basic stuff, so I selected the standard package. After entering a slew of information, the estimated 6-month premium was $548.48, or $86.18 more than my current coverage. Boo!

Candidate Two: Kanetix Insurance Search: I totally forget about Kanetix, some insurance search website I used back in the day when i was playing around with driver characteristics to see their affect on auto premiums.

Sadly, there was only one instant quote, a firm called Amica that was a whopping $123.83 a month, or $742.98 (a far cry from $462.30). A few more email quotes came trickling in like Unitrin Direct at $698 and Erie Insurance at $1,092 (with multi-policy discount) but nothing came within spitting distance.

Candidate Three: State Farm: I kind of fell into this quote after quoting homeowners insurance with them through NetQuote system. The agent, Debrorah, and I talked about a whole bunch of things but the end result was that State Farm would charge me $439.36 every six months, a savings of $22.94. Part of the reason for the lower price was because it would include a multi-plan discount because I would get homeowners insurance through them.

Normally, twenty bucks alone wouldn’t be enough to entice me because there’s a bit of hassle in changing your insurance. However, as you’ll see in a minute, the discount on homeowners with them would provide the real icing on the cake.

Homeowner’s Insurance

Right now we have our insurance through Traveler’s, which is the insurance company affiliate with GEICO, but they don’t offer any multi-policy discounts, which is a real bummer. We have $246k coverage on our dwelling, $24k on other structures, and some other items like $300k of personal liability coverage too, which is all pretty much standard. Our annual premium is $797.

The NetQuote system was a lot like LendingTree, they collect your information and they try to match you with insurance agents. Once I completed the application, I was immediately matched with an agent from State Farm Insurance Company and one from Allstate Insurance Company. My chat with the State Farm agent, Deborah, was great, we went through all sorts of information and arrived at a price of $610 a year for homeowner’s insurance – a discount of $187.

I got a deluge of phone calls from a variety of insurers. I talked to all of them, gave them all the information they needed to get me a quote and many came close but State Farm won out in the end. What was funny was that it took around two months between when I submitted my information to when I actually changed my policies over because of some career decisions we had to make, but the price of our quotes never changed (and only a couple of agents were persistent enough to continue).

See The Savings!

In the end, by changing over my policies, which in effect consolidated them into one account, we were able to save $220 a year. $40 in auto insurance premiums and $180 in homeowner’s insurance premiums, all for a total of a couple hour’s of work! Not bad.

If you haven’t shopped around for insurance in the last two or three years, I highly recommend it because you could be saving big money.

(Photo: bookgrl)

Review Your Insurance Policies Annually from personal finance blog Bargaineering.com.

Indemnity

Indemnity is what most people think of when they think of insurance. If an insurance company insures you against a certain loss and that loss happens, they pay you. The amount they pay is called an indemnity. When it comes to health insurance, indemnity insurance plans are usually one of the more expensive options because you can go to any doctor or hospital you want. The specific details and rules of your plan will vary based on the provider but in general the idea is that you have the freedom of choice with this plan type.

HMO

HMO stands for “health maintenance organization.” With HMOs, you are agreeing to use a specific set of medical professionals and everything goes through your Primary Care Physician (PCP). If you want to see another doctor, you’ll need to get a referral from your PCP. If you don’t get a referral or see physicians outside of your PCP, you risk not being reimbursed for those expenses unless it’s a medical emergency. The appeal of HMO’s is in a lower cost, for premiums, co-pays, deductibles, etc. You give up a bit of your flexibility with HMOs but the idea is that the cost savings more than cover it.

PPO

PPO stands for “preferred provider organization.” A PPO is a little more expensive than an HMO because you have additional flexibility. You save money when you go to a doctor or hospital that belongs to the PPO but you will still be reimbursed if you use one that isn’t part of the PPO. The reason why so many people like PPOs is that you can go see specialists without a referral, which may or may not affect your decision.

Insurance companies may have slightly varying definitions of these three terms but in general that’s what they mean. One option that many young professionals find appealing is a high deductible medical insurance plan. That’s where you have a high deductible to help cover catastrophic medical issues and then self-insure for smaller problems. It can save you money on premiums unless you start having a series of minor medical problems. My personal approach to insurance has always been to cover against the catastrophe but when it comes to my body, I don’t want to play any games.

(Photo: tessawatson)

Health Insurance Plan Types from personal finance blog Bargaineering.com.

For those, like me, who aren’t familiar with pet insurance, it’s just like your medical insurance. You pay monthly premiums and the pet insurance covers certain medical procedures and checkups. The more comprehensive the insurance, the more it covers and the more it costs. The big difference between the two is that with regular medical insurance today, the doctor usually interfaces directly with the insurance company. With pet insurance, you typically pay out of pocket and then request a reimbursement from the insurance company. I prefer the first way because then the doctor is often compelled to accept the price negotiated between the company and the doctor, which is often lower than the standard fee. By paying out of pocket first, you have to do the negotiating. (this may just have been the case with the insurance plans I saw)

Nick sent me a link to Veterinary Pet Insurance, the company he has his dog’s insurance with, and in reviewing the documents it seems pretty straightforward. VPI covers 90% of the scheduled allowance after a $50 per-incident deductible. If the procedure costs $1000, their benefit schedule covers $900 for that procedure, then they will pay out $765 ($900 – $50 x 90%) for the incident. Much like your standard medical insurance, they have a benefit schedule. Unlike your standard medical insurance, they don’t negotiate with the practitioner, you have to negotiate with them. I don’t know how flexible vets are about pricing but as I mentioned earlier, it’s easier if its the insurance company doing the negotiating (especially if you’re feeling the pressure because you know your pet needs the procedure!).

I entered in a quote for a two and a half year old Scottish Terrier and the comprehensive plan, with a $14k annual benefit allowance, cost $20.92 a month ($251/yr). The standard plan, with a $9k benefit allowance, was $11.33 a month ($136/yr). How does $251 a year stack up against the typical procedures a two and a half year old dog will face? I don’t know. I imagine though that, given it’s insurance, $251 is probably a bit above average (that’s how insurance companies work!).

Will we get pet insurance? Not sure yet, I think we will have to decide once we’ve adopted a dog and have a better idea of the types of medical expenses the breed will likely face in their lifetime. Another option would be to cover them when they are young and then once again when they are older. This opens up the potential for uncovered issues in the middle but depending on the price, it might be worth it. I don’t want to make an emotional decision but I also don’t want to be taken to the cleaners either way.

Anyone have experience with any other pet insurance companies or with pet insurance in general?

(Photo: cloneofsnake)

Is Pet Insurance Necessary? from personal finance blog Bargaineering.com.

In the past I’ve always bought a lot of my OTC products on Drugstore.com because they helpfully label which items are FSA-eligible, which takes a bit of the guesswork out, and because I won’t have to pay sales tax on my purchases. Amazon.com is a good place too but they don’t label FSA eligible products.

Last Minute FSA Ideas

• Contact lens solution
• First aid kits – When I’ve stocked up on everything else, I just buy some first aid kits to put in the car, my wife’s car, our kitchen, our upstairs closet…
• Band-aids, blister band-aids
• Motion/sea/car sickness pills
• Pain relief – Advil, Tylenol, Bayer, etc… you can’t have too much.
• Electric heating pads
• Thermometers
• Allergy medicine – Loratadine is always good to have, it’s the antihistamine in Claritin, at a fraction of the price.
• Healing lotions – They often smell like medicine but they’re good for you.
• Acid reflux drugs – I don’t use them often but when I need them, it’s awesome to have them handy.
• Smoking cessation products
• Braces, supports, ACE bandages
• Ice packs – for those sprained ankles
• Blood pressure monitor – instead of using the trusty arm wrap pump (I made up that name) and stethoscope, go 21st century!
• Defibrillator – This is for when you’ve grossly under-estimated your spending, by like a thousand dolllars or more, you can consider getting one of these. It’s for cases like where you planned on Lasik but then couldn’t get the procedure. These things usually last only a couple years too (pads last for around 2, battery for four, and you need to frequently test them), but they are lifesavers if you have a heart attack..

Good luck!

Last-Minute FSA Spending Ideas from personal finance blog Bargaineering.com.

xspook: I had their auto insurance for many years. I decided to shop around and found a much cheaper (over $600 a year savings) policy elsewhere. When I called to cancel, they offered to lower my policy, but couldn’t match the price I got elsewhere. That actually pissed me off, because, as a 10 year loyal customer I should’ve been getting the best price. Now that I tell them I’m leaving, they reward my loyalty with a lower price. Adios USAA. (emphasis mine)

Insurance is a tricky business that I know only a little about. In reading the Berkshire Hathaway Letters to Shareholders, the traditional payout on insurance premiums always seems to be in the 90’s (they make money by investing the float between when premiums are collected and claims are paid). That confirmed something I’ve always believed, that a large component of my car insurance premiums were dictated by risk. Riskier car? Higher premiums. Some accidents or speeding tickets? Higher premiums. Fair enough, that’s why I get insurance, to protect me.

But this little anecdote showed that threatening to leave your car insurance (or any insurance provider) can lower your premiums. I imagine the game that gets played is that all the organizational discounts, good driver discounts and such are up for grabs if a CSR can get you to stay. Who knows?

Either way, shop around for insurance and try twisting some arms to see if you can get a better rate.

Lower Insurance Premiums By Threatening To Leave? from personal finance blog Bargaineering.com.

A few years ago, when I turned twenty-five, I had a great opportunity to test a few car insurance myths empirically and I'm happy to report the 25 year old rate drop myth is in fact very true.

Myth #1: Rates Drop Significantly After 25

This myth is true.

I requested car insurance quotes before I turned 25 and after I turned 25. The results were a little mixed but Geico, my current car insurance company, dropped my rate by about 15% after I turned 25. However, in each year after my 25th birthday, my insurance rates have been going down by a significant amount as well. While there were other factors involved (perhaps Maryland drivers became cheaper to insure, I hadn’t gotten into any accidents, etc), I believe each year after 25 is marked with lower premiums as long as you stay out of trouble. It just so happens that 25 is the first of the big drops, which explains its top billing.

Myth #2: Married Couples Pay Less Insurance

This myth is true, but probably not for the reason you expected.

The logic behind this myth is that once the male in the married couple gets married, he’s a safer driver and thus cheaper to insure. However, when I got married earlier this year (and told Geico), our rates dropped more so because there was a safer driver listed on my account. When I added my wife as a driver, the average riskiness of the driver went down and thus the premiums went down. In fact, I couldn’t even indicate marital status in my profile… they didn’t care. (there is also a component of the multi-car discount mixed in but I added her as a driver before I added her car)

Myth #3: Females Pay Lower Pemiums

This myth is true.

All other characteristics being equal, a female paid 18.8% less than a male in my car insurance quote study. The logic, on the part of insurance companies, behind this is that women are safer drivers and that men are reckless. Is that true? Who knows, but male drivers pay their premiums as if it were true!

(Odd factoid: Going to college lowers your premiums by about 7%, though it’s something that I doubt any company will verify, but don’t go too far… a Ph.D or an M.S. won’t give you more of a discount over B.S.)

Myth #4: Comprehensive Claims Don’t Affect Premiums

This myth is partially false.

Finally, a somewhat false myth! Conventional wisdom states that if you file a comprehensive claim, your insurer won’t increase your premiums. That part of the myth is true. The part that’s false is that if you ever leave that insurer, the new insurance company will charge you higher premiums for coverage. Is that fair? Probably not, but that’s how it works. In my car insurance quote study (near the end), I found that a vandalism claim increased rates by 8% and a vehicle theft or loss of belongings totaling more than $10k was a nearly 14% increase.

Myth #5: Your Credit Score Affects Your Premiums

This myth is true.

You might be wondering, why the heck does my credit score affect my car insurance premiums? The answer is more subtle than you might think. The reality is that not every claimable event is claimed (how many times have you been in an accident and someone pleaded to keep the insurance company out of it?) and insurance companies realize this. So they not only want safe drivers but also those who aren’t going to submit claims – a higher credit score usually indicates more sound financial footing, thus more money to pay for expenses out of pocket. Sneaky huh!?

Here are all the referenced articles:

• Effects of Changing Coverages on Premiums
• Effects of Changing Personal Insurance Details on Premiums
• Auto Insurance & The 25 Milestone
• Does Marriage Affect Car Insurance Premiums?
• Car Insurance Premiums & Credit Scores

(Photo: afagen)

Testing the Top Five Car Insurance Myths from personal finance blog Bargaineering.com.

COBRA Coverage

If you recently left or lost your job and your former employer had health insurance coverage, they are required by law to extend COBRA coverage. COBRA is both the coverage and an acronym for the bill that created it, the Consolidated Omnibus Budget Reconciliation Act of 1985. In fact, I created a mini-site devoted to discussing COBRA called Understand COBRA that may be of value (All part of my “learn something by blogging about it” mentality). Either way, this will give you some coverage as you seek out independent health insurance.

Use A Broker

eHealthInsurance is a health insurance search engine that has been referenced by major sites like Yahoo! Finance and named the 2008 Best Site for Health Insurance by Kiplingers, but I’ve never personally used them except to research rates (they are owned by eHealth, Inc., which has been in business since 1997). There are many others but some strike me as spammy and eHealthInsurance lets you get a quick ballpark quote using only your zip code, age, whether you smoke, and student status. From there you will be presented with a list of options.

My first option was CareFirst Blue Choice $0 deductible HMO $30 PCP/$40 Specialist starting at $137 a month. The second was CareFirst Blue Cross Blue Shield $2,500 deductible Indemnity starting at $70 a month. There were maybe a dozen options in total. From there you’ll have to create an account for more information (you will need to provide further personal details including your social security number, current primary care physician, etc.).

Join An Organization

Regardless of the quote you get via eHealthInsurance, you should check out the rates made available to you through various organizations in your area. If you can join a local Chamber of Commerce, oftentimes members have access to group rates for health insurance. You could also consider the Freelancers Union and see how much insurance would cost through their partners (they have health, dental, term life, and long term disability). I’m sure there are more out there that offer insurance to their members, but those two are probably the easiest to join.

Marry for Insurance

This one is very tricky and can easily come back to bite you since marriage is both a religious/spiritual and a legally binding agreement. Ignoring the religious/spiritual issues, the legal issues step primarily from the tax perspective. While you may be getting health insurance, you may also come under fire from the marriage penalty when it comes to income taxes. If you opt to go this route, consult a tax professional (or do some math) to see how the various filing scenarios affects your taxes.

This is a good option for those who have serious medical issues that preclude them from getting insurance on their own. If an employer offers health insurance, they cannot, by law, exclude an employee’s spouse from the insurance plan.

Move To A Country w. Universal Health Care

The last and final option for someone who has exhausted all other options is to move to a country that offers a national/universal health insurance program that would cover them. I’m afraid I don’t know much about the health insurance coverage internationally but this Wikipedia page on universal health care should offer a good start if you’re considering this option.

Did I miss any options?

(Photo: brykmantra)

How To Get Independent Health Insurance from personal finance blog Bargaineering.com.

State Guaranty Associations & Funds

Unlike banks and brokerages, which are protected by FDIC insurance and SIPC insurance respectively, insurance companies are often backed by “guaranty associations” or “guaranty funds” at the state level. In Maryland, the Maryland Life & Health Insurance Guaranty Corporation insures life and health insurances while the Property and Casualty Insurance Guaranty Corporation insures auto, homeowners, rental, and other insurances. The limit of the coverage is $300,000 in life insurance death benefits, $100k in life insurance cash surrender/withdrawal, and $100k in present value of annuity benefits. I didn’t look up the Property and Casualty insurance limits but it’s generally $300,000.

For more information, visit the National Conference of Insurance Guaranty Funds as they have lots of information on the subject. If you would like to learn more about the guaranty association or fund in your state, the NCIGF has a directory of each state’s Department of Insurance where you can get specific state information. Finally, there are several publications that may be of interest to you.

(Photo: thetruthabout)

What Happens If My Insurance Company Fails? from personal finance blog Bargaineering.com.

I doubt anyone can argue against today’s deadly sin…

Being Improperly Insured

The reality is that insurance is a very difficult subject to tackle because it provides you protection against the unknown. Since you’re protecting against the unknown, it’s difficult to know how much protection you’ll actually need. Insurance is also very temporal. When you pay the premium for the month or the year, that protection is gone once the insured period passes. I’ve been driving for nearly five years and never once made a claim. That’s five years of auto insurance premiums gone. (I’m not complaining, I consider myself very lucky!)

But you can’t look at insurance that way and many people do. Insurance is a hedge against unknown events that could potentially bankrupt you and it’s a way for you to purchase peace of mind. So, how do you ensure you have the right amount of insurance? How do you avoid getting too much coverage or too little? Sadly, it’s mostly a judgment call but here’s how I approach it.

My approach towards insurance is that it should protect against catastrophic events. Not everyone is like that and that’s certainly not the “right” or “best” way to approach it, I don’t know what the “right” or “best” way is (or if there even is one). My tolerance of risk is such that I’m comfortable with assuming some self-insurance (high deductibles) in order to pay lower premiums.

How should you approach it? I can’t answer that other than to say that you have several factors that will affect how you adjust your coverages and deductibles:

• Assess your financial situation. If you have a fully funded emergency fund, consider increasing it and self-insuring through higher deductibles. If your current automobile insurance has a deductible of $500, increase it to $1000 and put the premium savings into your emergency fund. If you work in a volatile industry or have irregular income, consider adjusting your insurance so that any negative events don’t cause extreme financial distress.
• Known your own “riskiness.” If you’re a bad driver who is prone to accidents or mishaps, lower your deductible. There’s no sense in being prideful and making the wrong financial decision by increasing deductibles or removing certain coverages. If you live in a dangerous neighborhood, lower your homeowners deductible so that you’re better covered in the event of a break-in or fire.
• Know the statistics. Some cars are burglarized more than others, some neighborhoods are rougher than others, and some ethnicities are more prone to some medical problems. Be aware of these statistics, many of which can be found online, and use them to adjust your coverages.
• Your tolerance towards risk. If peace of mind is priceless to you, adjust your insurances so that you obtain that. You can’t quantify stress and all we know about its effects are that it’s bad on the body. Paying a few extra dollars so you can sleep better at night and prevent a few gray hairs is money well spent. Frugality is important but your health is more important.

I’m sure there are actuaries who know insurance backwards and forwards who would disagree with me, if you are such an actuary I invite you to let us know what you think.

7 Deadly Sins of Personal Finance: Get Adequate Insurance from personal finance blog Bargaineering.com.