Single Mothers and Life Insurance

 

Single Mothers and Their Families At Risk
Facts from LIMRA
Life Insurance Awareness Month, September 2011

 

 

Single Mother Households Are An Important Demographic:
 

-According to the U.S. Census Bureau, there are about 10 million single mothers with children under the age of 18 living in the U.S. .

-Most single mothers are not teenagers. In fact,U.S. Census Bureau data indicate that8 in 10 single mothers are at least 25 years old. Further, more than half of all single mothers have been previously married, with nearly all of these marriages ending in divorce. And, while many do earn low incomes, a fourth earn incomes of at least $50,000 annually placing them solidly in the middle class.

Single Mothers Own Life Insurance But Not Enough:

-Two-thirds of working single mothers own life insurance –37 percent own individual life insurance, and 46 percent are covered by group life insurance. This is higher than the ownership level for all women (57 percent) in the total population.

-However, of those who are insured, only a third of single mothers felt that their families would be able to cover expenses for a significant length of time should they die.

-Among those single mothers who earned incomes of $50,000 or more, close to 9 in 10 own type of life insurance, with almost half owning individual life insurance.

-The reasons single mothers give for not owning life insurance clearly indicate the budget constraints that two-thirds of uninsured single mothers face.

How Advisors Can Better Engage Single Mothers:

-Convey the costs of life insurance to all. Many single mothers believe that the costs are too high for them to afford. In reality this may not be the case -often people overestimate these costs.

-Offer to review the policy coverages of their clients and prospects. These policy reviews may result in single mothers buying additional coverage, or purchasing new policies with affordable premiums.

-Proactively offer financial planning to their clients. This can help customers prioritize their financial goals and manage their income (and debt) to achieve their most important goals. Single mothers may particularly appreciate this since even simple plans can bring some peace of mind.

-Be sensitive to the fact that single mothers are incredibly busy, and may not always be able to find someone to take care of their children.

 

http://www.limra.com/newscenter/pressmaterials/11SingleMothers.pdf
All facts are from LIMRA’s report: Flying Solo Single Mothers Protecting Their Families (2011).
Fact sheet may be reproduced in whole or in part if attributed to LIMRA.

Notable Omissions/Limitations in Your Home Insurance Policy

Do you know what types of losses your home insurance policy will cover? Perhaps more important, do you know what types of commonly occurring losses it will not cover?

Knowing the limitations in your policy is the first step to finding the fix. Following is a list of commonly occurring events or exposures that can cause significant financial damage to you and your family. What do they all have in common? Coverage for them is either limited or excluded under a typical home insurance policy.

Flood
According to the Federal Emergency Management Agency, floods are the most pervasive and damaging cause of loss in the U.S. annually. Floods are also responsible for more deaths than any other naturally occurring event in the U.S., and they happen in all 50 states.

FEMA designates areas as special flood hazards areas or “flood zones” on rate maps that are revised on an occasional basis. FEMA is quick to note that just over 30% of properties that sustain flood damage in the U.S. are not located in one of these zones.

You do not have to live in a flood zone to purchase flood insurance. 

Earthquake
Myth—The western U.S. is the only region of the country that needs to worry about earthquake damage.

Fact—According to the Insurance Information Institute (I.I.I.), earthquakes have occurred in 39 states, and damage resulting from them has occurred in all 50 states since 1900. The I.I.I. explains that some specific types of damage that may result from earth movement are covered by a typical homeowners insurance policy. Examples include fire, explosion and water damage. This is important because it’s common for the earth movement to rupture gas and water lines. However, it’s noteworthy that structural damage caused by the shaking of the ground is not covered by a home insurance policy.

Only an earthquake insurance policy will cover earthquake damage.

Ordinance and Law
Would the repair of your home be susceptible to increased costs resulting from having to comply with a building ordinance? As communities become more aware of potential property damage, stringent building codes are approved that must be adhered to for homes that are built new or rebuilt after damage. Compliance with such codes may significantly increase the cost to rebuild your home. For example, many regions of the country are adopting new codes to ensure homes built there use less water and are more energy-efficient. Installing the necessary materials and appliances could translate into more dollars for the repair.

The good news is that most home insurance companies will cover these increased costs due to ordinance or law. However, many such policies limit the available dollars to no more than 10% of the value of the dwelling. More coverage is typically available and should be considered if your community has adopted more stringent codes since your home was originally built.

Business from Home
As harsh economic conditions continue to hinder employers across the U.S., many former employees have decided to go into business on their own. Others may be employed with a firm but choose to work from home. Regardless, operating a business activity from home can create coverage problems under a typical home insurance policy.

First, a home insurance policy contains limited coverage for property used in the business. Many policies limit damage to such property, which may include items like equipment, inventory and computers, to a specific dollar amount, such as $2,500. The amount typically decreases when the business property is damaged while away from the residence.

The second major issue with a home-based business is liability coverage. With few exceptions, liability coverage for the business is not covered. Excluded injuries may include those to a customer or salesperson that occur in the residence or bodily injury suffered by someone using your home-based business’s product. Property damage caused by your home-based business’s operations, such as a side-job that causes structural damage to a customer’s home, are not covered by home insurance. Further, the home insurance policy does not cover professional liability claims. Such claims may include errors or omissions made by you in your performance as a professional.

Insurance for the home-based business may be available as an endorsement to the existing home insurance policy. For some home-based businesses, separate commercial insurance may be a better choice.

These and other potentially damaging issues must be brought into the forefront of the conversation with your insurance agent. Unfortunately, many agents and insurance buyers skimp on the details, looking to secure insurance using the path of least resistance. When this happens, exposures like these go unnoticed and often result in large out-of-pocket expenses to you.

 

From Trusted Choice http://www.trustedchoice.com/

September - Life Insurance Awareness Month

Facts About Life 2011
Facts from LIMRA
Life Insurance Awareness Month, September 2011
 

-The proportion of U.S. adults with life insurance protection has declined to an all-time low as 41 percent (95 million) of U.S. adults have no life insurance at all.

-Both men and women are less likely to own life insurance today than they were in 2004—only 61 percent of men and 57 percent of women have some sort of life insurance coverage.

-Only 1 in 10 insured adults own both permanent and term life insurance —half as many in 2004.

-The likelihood of being without life insurance has dramatically increased for every age group since 2004.
 

Troubling Declines for Men:
 

-Men ages 35 to 54 have seen large declines in individual life ownership in the past 12 years. This is troubling, since middle-aged men typically have families and are usually in their highest income earning years.

-Young males, ages 18 to 24, are less likely than in past decades to be starting their adult years with any individual life insurance. Only 13 percent had individual life policies in 2010, compared with 30 percent in 1998.

-Husbands ages 35 to 54 and 65 or older had double-digit declines in the proportion owning individual life insurance in the past six years.

-Since 2004 the likelihood of husbands having any life insurance has declined across every income level —low, middle and affluent.

Women Lag Behind in Life Insurance Coverage:

-While younger women are now as likely as their male counterparts to have coverage, women ages 55 and older are still considerably less likely than men the same age to own life insurance.

-Women of all ages average smaller amounts of individual life coverage than men of similar ages. On average, women have $129,800 of individual life insurance, while men have $187,100 of individual life insurance coverage.

-The gap in average life insurance coverage between husbands and wives with similar personal incomes has narrowed over the past six years —primarily because insured wives have experienced smaller declines in amounts of individual life and group life coverage than have husbands with similar personal incomes.

-Women with high personal incomes ($100,000+) are less likely to have individual life insurance or group life insurance than men with similar personal incomes.

More U.S. Adults Are Relying on Employer-Sponsored Life Insurance:
 

-Today, more insured adults depend solely on group life insurance for their only life insurance coverage than in the past.

-For the first time, the percentage of adults having group life insurance has surpassed adults owning individual life insurance (36% to 35%)

-However, the percentage of adults having group life insurance has dropped (down four percentage points since 2004), which is the first decline since group insurance was introduced.

-About 4 in 10 insured husbands and insured wives have only group life insurance coverage.

-People insured only through group life insurance have the lowest average amount of coverage

 

http://www.limra.com/newscenter/pressmaterials/11FOL.pdf

All information from this blog is at this link above.

 

 

 

 

Times Have Changed!

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Check out this beauty!

Loss Assessments: Home or Condo

If you live in a home in a developed area or subdivision, there’s a reasonable chance that you are a member of a homeowner’s association. The same is true if your pad is a condominium.

Association membership has its benefits. In return, members of the association are sometimes asked to contribute funds to help maintain the integrity/value of the common elements. Those common elements—a garage or clubhouse, for example—are those items of property commonly owned by all members. “Asked” may be too soft a word—such contributions usually are collected through mandatory assessments.

What are some things for which you as an association member can receive an assessment? Good question. The answer is typically found in association bylaws. In some states, laws will have something to say about the extent an assessment can be charged and for what it can be charged. However, such statutes do not exist everywhere.

Here’s another question: If you receive an assessment from your home or condo association, will your home or condo insurance policy help you pay for it?

The answer, well, depends.

Most home and condo insurance policies have very similar language in how they address coverage for loss assessment. There are a few things you will need to know before coverage can be determined.

What Caused the Assessment?
The home or condo policy only will kick in to pay an assessment that is charged to you for a reason that would be covered by your insurance. For example, if the assessment were charged to help cover the cost of damage to the clubhouse caused by a fire, your policy would pay due to the fact that fire is a covered loss under your policy. However, if earth movement damaged the same building, your policy would not pay if earth movement is not a covered loss under your policy.

If an assessment is charged to cover the cost of painting the exterior of the clubhouse simply because the association decided it was time to paint, your coverage would not kick in due to the fact that there has been no covered loss.

Assessments are not only charged to cover claims of damage to common elements. Members also may be assessed for claims of bodily injury or property damage against the association’s master policy. For example:

A guest suffers a permanent head injury after slipping on a damaged walkway. The bodily injury claim against the association is $1.5 million. The association’s policy will cover the injury up to its policy limit of $1 million. The association assesses its members to cover the remaining $500,000.

In this example, your insurance policy would kick in to help pay the assessment. Why?  Bodily injury is covered by your policy.

Which Policy Covers the Assessment?
Your home/condo policy says that it will only pay the cost of assessments that are charged during the policy period. This is important to note because it’s possible that the actual assessment may not be charged until months after the loss causing the damage occurred. For example, say the hurricane happens in August, when Company X insures you. In September, you switch your coverage to Company Y. The assessment for the portion of the hurricane damage that isn’t covered by the association’s master policy arrives in October. Company Y’s policy would kick in as it was in effect when the assessment was charged.

How Much Will My Home or Condo Policy Pay?
Most policies are issued with a limit of $1,000 to cover loss assessments. This limit is the most your policy will pay for a single loss, regardless of how many assessments are charged for it. For example, if the clubhouse is damaged by a hurricane, it’s possible that members may be assessed first to cover the cost of the association master policy’s deductible—and again to cover the cost of the repair that exceeds that policy’s limit of insurance. Since both assessments are charged due to the same hurricane, the total paid by your insurance would not exceed $1,000.

That $1,000 Seems Too Low. Can I Increase My Assessment Coverage?
Yes. Most home and condo insurance companies offer you the opportunity to add more coverage for loss assessments. It’s important to know that while the dollar amount may be increased, the terms of the policy still apply (i.e. you will still need the assessment to be charged due to a covered loss).

If you choose to purchase additional assessment coverage, proceed with caution. Most loss assessment endorsements will still only allow you a maximum limit of $1,000 if the purpose of the assessment is to cover the master policy’s deductible.

Final Note
Loss assessments can be expensive. Having the right home or condo insurance policy to help cover some of the cost could save you big bucks.

 

From Trusted Choice http://www.trustedchoice.com/

Cleaning up the Mess

It’s after the wind blows or the fire burns. The insured is sifting through the rubble of what used to be his commercial building, looking for any savable scraps of what used to be.

The good news is that the loss is covered and the insured will be getting a check for the cost to replace the building. The better news is that the policy limit was adequate and the insured will not suffer the consequence of coinsurance. But it’s not over.

The insured discovers that, due to increased demand resulting from widespread damage, hiring a contractor to remove the debris will be more expensive than anticipated. But that shouldn’t be a problem because the policy limit is adequate…right?

Most commercial property policies will cover the cost to remove debris resulting from a covered cause of loss. However, coverage may be limited or excluded depending on a few important factors addressed in the policy.

Factor #1 – How much is enough?

First, consider that it is not cheap to remove certain types of debris. For example, removing debris of an old frame building may be less labor-intensive than debris of a building with substantial masonry or steel. Removing such items will likely require the use of a contractor and heavy equipment. Also consider that high demand brought on by widespread damage will likely increase the contractor’s fee for service.

Second, consider how the policy calculates coverage to remove debris. Most policies say that the insured will have access to a stated amount—typically $10,000—plus the lesser of:

• 25% of the paid loss plus the deductible, or
• The remainder of the policy limit minus the paid loss.

For example, consider a loss to a building valued at $1 million. If the loss amount is $100,000 and the deductible is $5,000, coverage would be determined as follows:

• 25% times the paid loss ($95,000) plus the deductible ($5,000) = $25,000, or
• The remainder of the policy limit ($1 million minus $95,000) = $905,000.

In this claim, the insured has access to $25,000 plus the stated amount of $10,000 to clean up the mess.

Now consider the same building, only this time it is a much greater loss of $900,000. Coverage would be determined as follows:

• 25% times the paid loss ($895,000) plus the deductible ($5,000) = $225,000, or
• The remainder of the policy limit ($1 million minus $895,000) = $105,000.

In this claim, the insured has access to $105,000 plus the stated amount of $10,000 to clean up the mess. In the event of a total loss, it’s likely the policy won’t pay more than the stated amount of $10,000. The purpose of these examples is to show that the more severe the loss, the less money the policy includes for cleanup.

Factor #2 – What is ‘covered property’?

Most commercial property policies will pay only the cost to remove debris of “covered property.” This definition includes items specifically listed as such in the policy. The policy also lists items that are defined as “property not covered.” Items meeting this definition may also require cleanup, and the cost associated will not be paid by the insurance company. Examples of these items include pieces of the parking lot, building foundation, landscaping, and items that end up on your property from somewhere else.

Factor #3 – Pollutants

If a building is damaged and the site must be cleared, items defined in the policy as “pollutants” may require special care. For example, consider a print shop that catches fire, releasing highly toxic inks and dyes into the ground. Local engineers may require you to extract those pollutants from the site. If so, the cost may be substantial and is typically not covered by a commercial property policy or is limited to a specified dollar amount that may not be enough, such as $10,000

Solution

We can help you amend your existing policy to offer more coverage for the cost to clean up debris. We can also help you minimize your exposure by amending the policy to cover items that are currently excluded, such as those examples listed above. Further, we can help you understand the meaning of “pollutants” in your policy and determine if your property contains items that may require special care to remove

 

From Trusted Choice http://www.trustedchoice.com/

Times Have Changed!

Flood Insurance: What It’s All About

Not so long ago, Hurricane Katrina pounded the Gulf coast of the United States, wiping out more than 250,000 homes.

That massive storm painfully brought to public awareness the fact that flood damage is not covered by homeowners insurance. 

Many consumers were unaware that, even though their homes were ruined in the hurricane, they were not insured since they lacked flood insurance. Insurance against flooding (rising water) is different from insurance against driven rain or leakage, which often are covered. Since that time, tens of thousands of Americans have purchased flood insurance for the first time.

Three perils—fire, lightning and windstorm—are traditionally covered by homeowners property insurance. Flooding is excluded from homeowners coverage, as floods tend to be catastrophic in nature causing widespread damage in a geographic area. Private insurers are not able to absorb all that risk.

Hurricanes get a lot of attention, but big storms are not the only cause of floods, nor are floods limited to coastlines. In fact, flooding is the nation’s most common and frequent natural disaster, according to federal officials.

Flood insurance first came about after the federal government was called upon to bail out communities. As the nation grew after World War II, flood-damaged communities turned to the federal government for disaster relief and rebuilding assistance. In the 1960s, Congress sought a more proactive system, and in 1968 created the National Flood Insurance Program (NFIP).

This community-based insurance mechanism requires municipalities to adopt and enforce flood-abatement measures. In order to join the NFIP, it must adopt a program of corrective and preventive measures for reducing future flood damage (including zoning and building requirements). Flood insurance is available only to consumers in communities that have joined the NFIP.

The National Flood Insurance Program (NFIP) is part of the Federal Emergency Management Agency (FEMA). It provides flood coverage to homeowners and renters as well as commercial building owners. Coverage is provided through Trusted Choice^® insurance professionals as well as through other insurance agents.

Flood insurance may not just be desirable for homeowners, it may be required. For example, mortgage lenders are legally bound to require consumers buying a house in a high-risk flood zone to have flood insurance.

Consumers owning or renting property in low- or moderate-risk flood areas can buy flood insurance, and may be eligible for a lower-cost preferred risk flood policy.

Flood insurance protects against losses to buildings and contents (not the property on which they sit). Coverage is in effect whether flooding results from heavy rains, storm surge on the coast, melting of snow, blocked storm drainage systems, levee or dam failure, or other causes. Waters must cover at least two acres or affect at least two properties to be considered a flood for insurance purposes.

Residential flood insurance provides as much as $250,000 of coverage for dwellings for 1-4 families, and as much as $100,000 for contents. Commercial property owners can get up to $500,000 of insurance for the building and the same amount for contents. Condominiums also can be insured.

Unlike homeowners insurance, flood insurance has a waiting period. The NFIP sets a standard 30-day waiting period before flood coverage goes into effect (except for lender-required flood insurance, if more insurance is required because of a flood map revision, or if existing coverage is being increased upon renewal).

 

From Trusted Choice http://www.trustedchoice.com/