Archive for April, 2009

6 Tips For Cheap Homeowners Insurance

Wednesday, April 22nd, 2009

Here are 6 tips to get cheap homeowners insurance.

1. Consider raising your deductible. This is a quick and easy way to reduce the cost of your insurance. If you have a $500 deductible, consider raising it to $1000, if it saves you enough money.

2. Consider reducing your dwelling coverage. If you owe less than the house is insured for, you have the option to reduce the amount of coverage you carry. As long as your house is insured for at least what you owe on it, your lender will not care. Reducing the dwelling coverage will reduce the premium.

3. Eliminate non-essential coverage. Review your policy and consider getting rid of non-essential coverage such as extra jewelry floaters or other costly extra optional endorsements.

4. Go to ACV. Actual cash value (ACV) means that depreciation is deducted from claims. ACV coverage on a roof is much cheaper than covering the roof at full replacement cost. This will save money.

5. Shop around: In many cases, an insurance company will attempt to gain market share in a state by offering rates that are much lower than competing insurance companies. Take advantage of this and switch to the company offering the cheap homeowners insurance.

6. Take advantage of package discounts: Most insurance companies will offer significant discounts if you will write your home and autos together as a package. Getting a package deal can give you some cheap homeowners insurance.

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Reinsurance

Tuesday, April 14th, 2009

Reinsurance refers to the way one insurance company agrees, for a certain premium paid, to take responsibility and reimburse another insurer against all or part of the losses. The company seeking insurance is termed as the ceding insurer and the one offering a cover is called a reinsure. This arrangement makes sure that no insurance entity faces a financial burden that it has no means to repay. Reinsurance can be purchased for the life or for a particular period such as for a year etc.

Insurance companies in general go for aggregate stop-loss reinsurance or excess-of-loss reinsurance. When the aggregate losses for a group are well above some expected level, the insurance carrier would not have set a premium high enough to cover the losses. That is when aggregate stop-loss reinsurance is useful for them. Companies that have a self-insurance health plan as well as insurance companies use excess-of-loss reinsurance when the expenses of an individual exceeded certain set limits.

Before companies go for reinsurance they have to carefully analyze if they need reinsurance, what type of reinsurance is appropriate for them, the level of reinsurance needed, and who to get it from. They need reinsurance in case of natural calamities such as tsunamis, floods, tornado, hurricanes, fire, earthquake, or man made tragedy like September 11 strike of the twin towers. They may use it to even out claim patterns as they may peak unexpectedly at times. It also helps insurance companies absorb higher losses as well as issue more policies. Ceding companies may assume greater risk than is possible considering their size, offering policyholders larger limits of coverage than possible with its own capital. Risk transfer is the main reason why several insurance companies opt for reinsurance.

Reinsurance reduces the capital needed to provide coverage, helps increase surplus as it reduces the amount of net liability. Insurance companies function better, knowing that they are covered, in case the unthinkable happens and the companies face a multitude of claims at the same time. Since the September 11 tragedy reinsurance has assumed a greater significance as also reinsurance companies are seeking ways to protect themselves from facing bankruptcy as many reinsurance firms did due to the tragedy.

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Life Insurance

Wednesday, April 8th, 2009

Life insurance is a big part of financial planning for the future in the event of your death. It pays for the funeral expenses and all other debt left by the deceased. It is important to remember that not only should the bread winner be covered, but the spouse should be covered too. How will the remaining spouse cope with the added expense of child care etc. Select the best policy that fits your need and your budget. Decide how much you need to cover mortgage, car loans, credit card debt and add three times your yearly wage to calculate your minimum life insurance needs.

Simply put, you pay premiums, usually monthly, and if you die during the term of the policy, the insurance company will pay the sum assured. There are many factors taken into the account when getting quoted for your life insurance. One is your age. Generally the younger you take out life insurance the cheaper it will be. Another is the state of your health. If, for example, you have a bad heart or any other physical problems, your premiums will reflect this. Another issue considered is if you smoke or not. Life insurance is very much a personalised thing and the cost can vary between companies, so it makes sense to shop around

Who needs life insurance? Mortgage lenders advise all borrowers to take out life insurance, to ensure that your dependents or next of kin are not left with the mortgage debt should you die. Another consideration is critical illness insurance to help cover your mortgage in the event of being diagnosed with a critical illness. However if you are single with no dependants, income protection may be an alternative to critical illness. Find out more about income protection here.

Where to get life insurance? The main rule for life insurance is to shop around. Different companies have different rules and rates. That’s why you are better to contact an independent financial adviser who can shop around for you. Make a life insurance cover enquiry here and one of our advisers will help source a competitive quote for you from the whole market, with no obligation. Another thing to consider is that if you have a partner, perhaps buying two separate policies, so in the event of divorce this is one less thing to worry about.

How much cover is needed? The first thing you need to do is cover your mortgage and some of your debts. Then you need to have enough to cover your income, realistically ten times of your gross income should be covered. For your life insurance cover you should aim to have a sum assured to cover your mortgage, other debts, and leave your family with something to live on. Your financial adviser can help with this. Alternatively it is important that you do not over-insure yourself, paying unnecessarily high premiums.

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