Mama, don’t let your babies grow up to be fishermen, pilots or roofers — at least if you want them to find reasonably priced life insurance.
Some professionals, such as bomb disposal experts, should expect that their job is going to make it difficult to buy life insurance. (It’s just one of the hazards of having a job with a deadly weapon in its name.) But other workers may have no idea that their profession is deemed high-risk by insurance companies.
“The truth is consumers don’t think they are in high-risk professions,” says Mike Kilbourn, president of Kilbourn Associates in Naples, Florida. “A roofer doesn’t think he will pay more because he stands on a roof all day. And he might not find out until the application is submitted to the insurance company.”
How life insurance companies size you up
Life insurance rates are generally based on the policyholder’s life expectancy. Insurers will examine numerous variables to predict your lifespan, including your age, gender, nicotine use, alcohol use and health history – plus extra risk factors such as your occupation and hobbies.
Insurers often offer people in risky occupations “rated” policies – if they offer them policies at all. Compared to policies for people in “ordinary” careers, rated policies will cost policyholders extra money in premiums every month.
That doesn’t mean, however, that all insurers take the same view on dangerous professions.
“Not all companies rate a particular risky profession the same, and thus the premiums for the same coverage can vary significantly between companies,” Kilbourn says. “So, a person who applies for life insurance may be approved at a ‘standard’ rating by one insurance carrier, yet be rated as a ‘substandard’ by another – even with the very same information on their insurance application.”
This is good news for those who have been denied policies by one or more companies because of their risky job. It means they may still be able to find an affordable policy, provided they’re willing to shop for thebest life insurance company for their needs.
Unsure whether you’re in a risky line of work? These occupations have the 10 highest fatal work injury rates, according to a 2014 report by the Bureau of Labor Statistics. If you’re employed in one of them, don’t be surprised if your insurance agent raises an eyebrow when you submit your application.
Falling trees, gusting winds, buzzing chainsaws, unpredictable terrain and dangerous wildlife are just some of the factors that make logging a calamitous profession. Its fatality rate is 91.3 deaths per 100,000 workers. (For reference, the national average fatality rate for U.S workers is 3.2 deaths per 100,000 workers.)
2. Commercial fisher
Harsh weather, heavy equipment, unrelenting sun exposure and sleep deprivation are among the risks taken by commercial fishers. Their fatality rate stands at 75 deaths per 100,000 workers.
3. Aircraft pilot/flight engineer
High stress and long hours take their toll on commercial airline pilots, search and rescue pilots, and flight engineers. Test pilots court risk while pushing equipment to the brink, while crop dusters are exposed to a host of chemicals as they fly low near power lines and other hazards. The death rate of pilots and flight engineers is 50.6 deaths per 100,000 workers.
Some roofers might be surprised to learn that their profession’s fatality rate of 38.7 deaths per 100,000 workers gives it the fourth-highest rate of fatal injuries. But it’s hard to get around the inherent dangers that come with working on an elevated surface virtually every day.
Farmer and ranchers face many of the same hazards as loggers, but with an extra peril: tractors. The leading cause of death for farmers and ranchers involved overturned tractors, according to the CDC. The rate of death among farmers is 21.8 per 100,000 workers.
There are so many mining disasters that the Mine Safety and Health Administration breaks down the tragedies by specific variables. But rampant news coverage of mining disasters may be increasing safety awareness in this industry. Although fatality rates naturally vary by year, after the CDC reported 70 fatalities in 2010, that number dipped to 35 in 2012 and the BLS report, which looked at data from 2013, found a fatality rate of 26.9 per 100,000 workers for mining machine operators.
7. Refuse and recyclable collector
You may tip your garbage collector every Christmas, but it’s possible he deserves more for the risks he takes. Working with heavy, potentially hazardous equipment, jumping on and off moving vehicles and exposure to chemicals brings this job’s fatality rate to 33 deaths per 100,000 workers.
8. Truck driver (and others who drive for work)
The sprains, strains and exhaustion of truckers are just part of this story. The Occupational Safety & Health Administration reports that more of these workers are killed or injured on the job than any other occupation in the U.S., due in part to the heavy equipment, chemicals and on-the-road perils involved in this work. The occupation ranks seventh on the BLS list – at 22 fatalities for every 100,000 workers – with truckers and those that drive as part of sales jobs combined.
9. Electric power line installer/repairer
Working with high voltage while high in the air is dangerous enough on clear, sunny days. But many of these workers install and repair the lines at night and in nasty weather, bringing this occupation’s fatality rate to 21.5 deaths per 100,000 workers.
10. Construction laborer
Collapsing scaffolds, falls and electrical shocks are some of the fatal hazards cited by OSHA that bring the death rate of construction workers to 17.7 deaths per 100,000 workers. The BLS found that half of all contract workers who were fatally injured in 2013 were working in construction.
How to get life insurance with a dangerous job
Workers in dangerous professions are often still able to get life insurance, though they may not like the cost of it.
But as with people in nonrisky professions, the best way for high-risk workers to find the most affordable life insurance quotes is to be diligent and shop several different companies.
Steven Schwartz, vice president and practice leader of the Executive Benefits division at HUB International in Northeast, New York, notes a particular client who was quoted a $5,100 annual premium by one company before turning to Schwartz, who secured him a $1,700 annual premium from a different company. That’s a savings of $3,400 a year (or nearly $70,000 over the life of a 20-year term life policy).
Krystalynn M. Schlegel of M.G. Schlegel & Associates, Inc., an estate and business planning brokerage in Novato, California, agrees that matching a client with their ideal insurance company is crucial.
“Oftentimes, if I have a client with a high-risk profession I will write a cover letter to the insurer explaining the specifics, supplying credit reports, driving records and personal details such as if they go to church, if they have kids,” she says. “That helps (the underwriters) understand them better.
And don’t forget: If you’re in a high-risk job when you obtain your life insurance policy, but change to a safer profession later on, you can petition your insurance company to reconsider your premium.
When you sign up for a new health insurance policy, it doesn’t get implemented with immediate effect. The policy comes into effect after a ‘waiting period’, which depends on the the kind of insurance and other factors, such as age, your medical history and the company. In other words, the insurer is liable to entertain any claim amount filed only after this waiting period.
If an individual undergoes an accident or undergoes hospitalisation during the waiting period, the customer may not be covered for a loss. As mentioned before, the concept of waiting period exists across different kinds of insurance policies, and the quantum of waiting period may differ depending upon the insurer and the nature of the insurance policy.
However, following are the broad indicators of waiting period. There is an initial waiting period of 30 days, which goes up to 90 days in some cases, from the effective date of the policy. Some insurance policies may permit treatment for accidental external injuries with a minimum of 24-hour hospitalisation.
Pre-existing diseases may not be covered in the first 2-4 years of the policy depending on your age and the nature of the policy. A pre-existing disease refers to any medical condition of an individual prior to the commencement of the policy. Now the policy may be effective for any other ailments in the first few years of the policy. Buy any claim filed for illness related to the pre-existing disease will not be covered in the first 1-4 years of the policy as stated in the policy document.
This feature is most common in insurance policies designed for senior citizens. Also, the insurer may insist that you stick with the same insurer if you want the cover to continue without further waiting periods in future.
The third is the ailment-specific waiting period, during which an ailment will not be covered. This again varies from company to company. But some common ailments that involve waiting periods include, ENT disorders, polycystic ovarian diseases, diabetes, osteosrthiritis, osteoporosis, hypertension and hernia. These ailments are usually covered only after two years from the date of commencement of the policy.
If you are the beneficiary on a recently deceased person’s life insurance policy, you need to file a claim for the death benefit. If you don’t, you probably won’t see the money and you definitely won’t be alone: Unclaimed life insurance benefits total at least $1 billion, according to Consumer Reports.
Don’t think that it’s greedy to think about life insurance after a person’s death. The purpose of having life insurance is to help loved ones cope with the loss. The financial needs that arise soon after a family member’s death can be significant, so there should be no shame in pursuing the money that the deceased wanted you to have.
Here are the steps to take to do this.
1. Get the policy details
With any luck, you’re already aware of the deceased’s life insurance policy and where it is located. Ideally, it will be stored in a safe place such as a metal filing cabinet or fireproof lock box.
However, you could have a slight problem if the policy was kept in a safety deposit box at the bank.
“In most states, safety deposit boxes are sealed temporarily upon one’s death, which could delay settlement,” says Whit Cornman, a spokesman for the American Council of Life Insurers.
If you’re unsure of where the policy details are, common places people store important papers are nightstands, desk drawers and bookshelves. It’s possible the deceased had life insurance through work or bought a policy independently from a life insurance company, so insurance agents and human resources personnel may also be helpful in tracking down policy information.
2. Check for other policies
Even if the deceased never mentioned them, there may be other insurance policies in place. These can include accidental death and dismemberment policies, which employers sometimes offer as riders to their insurance policies. Again, checking with the deceased’s human resources representative can be helpful here.
If the deceased was killed while traveling and had travel accident insurance, you may be entitled to additional benefits. Check with representatives from the credit card used to buy the tickets and travel, as well as the road clubs to which the deceased belonged.
You should check for government benefits as well, says Insure.com Managing Editor Robert Beaupre.
Surviving spouses and children may be eligible for a small Social Security burial benefit, or for monthly survivor benefits. If the deceased served in the military, you may be eligible for some benefits if he or she served in a war zone or a service injury contributed to the death.
3. Contact the agent
You should notify the insurance company as soon as possible that the policyholder has died. Once you have found the life insurance policy, look through it for a contact name and number. If you know the name of the life insurance agent who sold the policy, he can help you file your claim.
“He can act as an intermediary with the insurance company,” Cornman says. If you don’t know the name of the agent, you should contact the life insurance company directly.
If the deceased had group life insurance through his employer, you can contact the human resources department at the employer about your claim. The deceased’s pay stubs might indicate whether charges for additional group life insurance coverage occurred each month.
“If you are unable to contact the employer, you can contact the life insurance company directly,” Cornman says.
4. Obtain copies of the death certificate
When filing a claim for the proceeds of a life insurance policy, you will need a certified copy of the person’s death certificate.
“A death certificate is the standard form of documentation required when filing a state life insurance claim,” Cornman says.
The funeral director can help you obtain certified copies of the death certificate. They usually will be sent to you by the vital records department in the state the person lived within a few weeks of the death. Usually there is a fee for each copy.
If your loved one is presumed missing and hasn’t been declared dead, you won’t have a death certificate. Under these special circumstances, you may need an acceptable alternative to the death certificate.
“In this case, a court order stating that the insured is dead or presumed dead may suffice,” Cornman says.
5. Request claim forms
The representative of the life insurance company can help you obtain the claim forms you will need. You will need to complete the forms and gather all the information that the insurance company requests.
If you’re too upset to fill out the forms yourself, ask your insurance agent or estate lawyer to help you. You will have to sign the form, however. All the beneficiaries named in the policy will have to fill out claim forms.
If you want your claim to proceed quickly, be sure to follow the directions from the insurance company carefully.
6. Choose how your proceeds will be paid
You may have several payment options available to you. They can include a lump sum, which may be a good option if you need to pay immediate expenses. It may also be possible to have the life insurance company pay you principal and interest in installments.
Another option with some policies is a life income option, which aims to stretch payments over your remaining lifespan. Some policies also have an interest income option where the company holds the proceeds and pays you interest, allowing the death benefit to remain intact. Upon your death, it will go to a second beneficiary of your choice.
In most cases, life insurance proceeds are not taxable. However, if you choose one of the options that pays you interest, the interest may be taxable as income. Check with your financial adviser before choosing your option, as settlement options sometimes cannot be changed.
7. Submit the completed forms
You will need to send back the completed paperwork and include a certified copy of the death certificate. Be sure to return the forms and death certificate via certified mail or with a return receipt requested so you can track it should it not arrive within a reasonable time. That way, you will also know when the forms arrive. Then it’s simply a matter of waiting for your check to come in the mail.
“In most states, prompt pay laws require insurers to respond within a certain number of days,” Cornman says. “However, the number of days can vary from state to state.”
It can take a few days to a few weeks to see your check. But if you have done everything correctly, the benefit should be in your hands reasonably soon.
According to the Insurance Institute for Highway Safety, teen drivers are risky drivers. It could be reckless behavior or it could be inexperience, but the fatal crash rate per mile for 16-19-year-olds is three times that of drivers age 20 and older. That means insurance companies are automatically going to see your teen as a claims risk and raise your rates. If your child starts racking up tickets or gets in a fender bender or two, watch your rates head to the stratosphere.
You may be able to keep your premiums lower by helping your teen avoid risky behavior behind the wheel, and that means getting them into the best driver’s education program possible. I selected my daughter’s school here in Michigan, in part, because it was able to demonstrate statistically that its graduates ended up in accidents at a rate far below the statewide average for all teen drivers.
2. Embrace Your State’s Graduated driver Licensing Program
All 50 states have enacted graduated driver licensing programs that gradually ease teens into independent driving. Typically, the programs require 30-50 hours of supervised drive time before a restricted license is issued, until a teen’s 18th birthday. The IIHS says graduated licensing programs are associated with fewer teen fatalities and fewer insurance claims. But the programs can work only if you enforce them at home. Don’t fudge numbers on the drive-time log, and don’t turn a blind eye when your teen blatantly violates the restrictions on their license.
Sure, it can be a pain to spend 50 white-knuckled hours in the car with your teen while they are learning, but hopefully your reward will be lower insurance premiums and a child who makes it to adulthood.
3. Avoid Letting Your Teen Have Their Car …
It can be tempting to buy your teen a vehicle. Then they won’t be constantly borrowing yours and potentially making a mess of it. I advise you resist the temptation for these reasons:
- Having them drive your car would make them a secondary driver rather than a primary one, a designation that could keep your premiums lower.
- Having them share the family vehicle may limit their drive time, which could be a good thing for young drivers who are prone to getting in accidents.
- Buying another car means you’ll be paying insurance on another car. Need I say more?
4. … Or Make Sure Theirs Is Cheap(er) to Insure
But maybe you’re in a situation in which you really need your teen to have a separate vehicle. I can imagine this would be especially true if your household only has one vehicle currently. In that case, be smart about the type of car you get your teen. Some vehicles are safer and, in turn, cheaper to insure. The IIHS has recommendations as to what it considers the best cars for teens.
5. Add Your Teen to Your Policy
Assuming you will be paying the premiums, it is almost always the better deal to add your teen to your policy rather than purchase a separate one. The insurance company takes into account the driving record of each person listed on a policy. Your good driving should partially offset your teen’s potentially risky driving. Plus, your account may come with discounts not available on a teen’s policy.
6. Look for Teen Driver Discounts
When you add your teen, ask the insurance company about discounts for new drivers. Students with good grades may be eligible for discounts; those who take an approved safety course may also be eligible. If your teen goes away for school and doesn’t take the car, you may be able to get a discount for that, too.
7. Let the Insurance Company Spy on Your Teen
Usage-based insurance is one of the latest fads in the world of automobile insurance. Auto insurance companies send you a device that you plug into a port under your dashboard. It records how fast you drive, how fast you accelerate and how fast you brake, among other things. Then, if the auto insurance gods say you’ve been a good driver, you’re rewarded with a discount on your premium.
These discounts are available to all drivers, but parents might find they are useful for monitoring their teens. Some companies issue reports grading driving skills, and some teens might be inclined to lay off their lead foot if they know someone, somewhere is watching. If you like the idea of monitoring your teen but aren’t thrilled with the idea of letting an insurer inside your dashboard, you could alsotry spying yourself.
8. Consider a Higher Deductible or Lower Coverage
One surefire way to reduce your premiums is to raise your deductible. Just make sure you have enough in the bank to cover it if needed. Similarly, you could see how much it saves to drop collision or comprehensive coverage. However, do the math before making any rash decisions. Unless you can afford a new car, dropping comprehensive coverage could mean you’ll be without a set of wheels if your vehicle gets totaled.
9. Shop Around for Better Rates
I was shocked to find out the insurance company, to which I had been so faithful for 17 years, was charging me double what other insurers were quoting. Perhaps it’s different for other companies, but my experience was that loyalty doesn’t necessarily pay off in terms of cheaper premiums.
Before you blindly add your teen to your existing policy, shop around for better rates. Underwriting policies vary by company, and some may have better pricing for young drivers. In addition, teen discount programs can differ between insurers.
10. Consolidate Your Coverage With One Insurer
Finally, when you find the right car insurance company, consider moving all your policies to that provider. Virtually all insurance companies offer multipolicy discounts, and the more you insure, the greater your discount may be.
With rising wedding costs and planning timelines of a year (or more) before the big day, the risk of unexpected or last-minute nuptial mishaps is increasingly present and ever more costly. The wedding dress, the centerpiece of many a bridal fantasy, is no exception. Protecting that investment – an average of $1,357 is now spent on the gown – from the “say yes to the dress” moment to the walk down the aisle can provide welcome peace of mind for emotionally and financially invested couples and their families.
Check Your Existing Coverage
Before purchasing any wedding-specific coverage for your nuptial attire, check your homeowners or renter’s insurance policy. Items such as wedding wear, along with gifts and liability, may fall under your existing policy. Speak with your insurance agent about coverage specifics and review the language of your policy to become familiar with any special rules or procedures you need to follow to qualify for a claim. You don’t want to lose your opportunity for coverage due to a failure to follow terms.
If you used a credit card to purchase your wedding dress, tuxedo or other attire, you will have the added protection of the federal Fair Credit Billing Act, which affords you the right to dispute billing errors and fight back against vendors, potentially recovering losses should something go wrong.
While helpful in providing an additional safeguard, relying on your credit card alone for the protection of your wedding attire, particularly when purchasing or making deposits far in advance, is not necessarily fail-safe.
Insuring Your Dress – And More
You can insure your gown under a broader wedding-insurance policy that covers photos, gifts, rings, deposits and other nuptial essentials, as well as a variety of potential wedding-related incidents, such as a vendor going out of business or delays due to sickness or injury of an essential member of the festivities. In short, wedding insurance is a tool to protect a couple’s investment in their big day from circumstances beyond their control. Disasters involving the gown are no exception.
This type of insurance is available through the Wedding Protector Plan from Travelers Insurance, the WedSure Plan from the Fireman’s Fund and WedSafe Wedding Insurance offered through Affinity Insurance Services Inc.
Wedding-dress coverage varies, depending on the provider and policy, but typically, wedding insurance covers loss, theft or damage to the bridal gown as well as to other attire specific to the big day.
Circumstances beyond the control of the couple are reimbursable – for example, if the shop fails to deliver the dress, the seamstress ruins the alterations or the tux is torn or lost on the plane.
However, most plans do not cover “changes of heart,” i.e. wedding cancelation costs due to the bride and/or groom deciding not to get married. The one exception is WedSure, which only covers party funders who are not the bride and groom – and only if the cancelation is made more than 365 days before the first covered event.
Buying Wedding Insurance
You can purchase wedding insurance at just about any point in the wedding-planning process. The Travelers Wedding Protector Plan, for example, covers deposits made prior to purchasing the insurance as long as receipts are available and no impending or existing claims are present when you buy the insurance.
When estimating the coverage you need for your attire, consider the cost of your gown, veil and all other bridal-party wear. Typically, there is a specified maximum amount that can be claimed under each coverage section of a wedding plan – in this case, attire – and it ranges depending on the provider and policy.
A deductible may or may not apply; the Wedding Protector Plan, for example, doesn’t have deductibles. If you have a claim, covered losses are paid from the first dollar up to the applicable limit. Just be sure you understand the details of the specific insurance plan you intend to purchase and keep records of receipts and any other relevant paperwork in the event that you need to file a claim.
Basic policies for weddings usually cost between $150 and $550. Considering the cost of the average wedding today – over $30,000 – the price of protection is not a high one to pay.
Clearly life insurers have the right idea. Go where the money is or in the case of Millennials where it will be in the future. In fact Northwestern Mutual Life Insurance Company purchased robo-advisor LearnVest during the first quarter of 2015. Northwestern Mutual is not alone in its efforts to tap and understand Millennials. Both Mass Mutual and Pacific Life are involved in efforts to court Millennials largely through education. (For more, see: How LearnVest Works.)
This seems an odd combination at best, much like an old commercial showing a couple holding hands with one wearing an Ohio State jersey and the other wearing one from Michigan. Millennials are a savvy, educated group of consumers which also carries over to their consumption of financial products and advice. Life insurance should be a priority for those in this age group who have a need for the protection. Certainly for those who are married, have kids or others whose financial well-being would be in peril if they died. Life insurance is a key element in a financial plan. (For more, see: Advising FAs: Explaining Life Insurance to a Client.)
Beyond life insurance there is likely a desire to sell a wide range of financial products to this huge group of emerging investors. It remains to be seen how Millennials will react when they begin to delve into some of the investment and annuity products offered by these insurers.
How will the insurers justify their often high cost mutual funds against low cost alternatives from the likes of Vanguard? What type of educational material can they present that justifies these higher cost products? How will they convince these inquisitive, tech savvy young consumers that purchasing high cost annuities and life insurance products with an investment component (and generally high fees and surrender charges) is a good idea? (For more, see: A Financial Advisor’s Guide to Millennial Clients.)
Back in my day many new college grads went into life insurance sales and were told to call all of their friends and relatives and sell them a policy. I suspect that this approach is not is good one with the Millennials. To their credit it appears that these insurers and others are not taking this path. (For more, see: How to Help With Millennials’ Money Habits.)
LearnVest and Northwestern Mutual
LearnVest’s education-oriented approach and fee structure are a good fit for Millennials and others. In a very smart move Northwestern Mutual will allow LearnVest to continue operating as a separate company, presumably with no responsibility to sell any financial products. This will allow Northwestern Mutual to use LearnVest to build its knowledge base on Millennials, their financial needs and how to best attract them as clients. Northwestern Mutual has a dedicated director of Millennial marketing who was quoted in a recent CNBC piece as saying: “More than half of our new clients are under age 34.” (For more, see: The Generation Y Investment Portfolio.)
According to recent research by Gallup, Inc. Millennials are more than twice as likely as all other generations (27% vs. 11%, respectively) to purchase their policies online rather than through an agent. This flies in the face of the traditional insurance company delivery method not only for life insurance but for other financial and investment products as well. (For more, see: Retirement: Which Generations are the Best Savers?)
The same Gallup research also indicated that Millennials will often follow the lead of older family members in terms of the insurance companies they choose. Gallup indicates that building strong ties with Baby Boomers and Gen X-ers is a good tactic for insurance companies looking to tap into the Millennial market. (For more, see: Financial Advisors Need to Seek Out This Group NOW.)
How Will it Work?
Based in large part on my own bias against the sales tactics used and products offered by some insurance companies and their agents and reps I was intentionally harsh earlier in this article. The efforts of Northwestern Mutual, Pacific Life, Mass Mutual and others to understand and educate Millennials is to be commended. (For more, see: How Millennials Use Tech & Social Media to Invest.)
What I am having trouble reconciling is what and how these insurers will serve Millennials and sell to them. I doubt the old sales tactics used by insurance agents will hold up. As I indicated above I’m also leery about how these insurers will justify their high cost products to this group. (For more, see: How Young Investors Can Avoid Financial Pitfalls.)
Perhaps the insurers will move in part to an advisory model where agents are paid for advice rather than only on the sale of products. Clearly life and disability insurance as well as annuities and other insurance related vehicles have their place. Life insurance companies also have a big “nut” to service based on their potential liability for policy benefits. (For more, see: How to Attract Millennial Investors.)
Are life insurers and Millennials really such strange bedfellows? Probably not. Millennials will grow older, marry, have children and other needs for life insurance and related products. Life Insurance companies I suspect will also learn a thing or two from studying Millennials and hopefully this will translate into better, lower cost products as well as perhaps a more consumer friendly delivery system.
You can insure your home and car from disasters and accidents. Life insurance essentially protects your family from the loss of your income should tragedy strike. You can’t insure your retirement accounts in the quite same way, but there are a few tried and true strategies that can safeguard them.
1. Continue Saving for Your Retirement Even During Your Golden Years
There is no rule that you have to stop investing when you hit your golden years. One of the best hedges to outliving your retirement assets is to continue investing even when you reach retirement age. While there are mandatory age distributions from 401(k) retirement plans and traditional IRAs, you can continue to make investments in other assets during your retirement.
“With increasing life expectancy and retirements that could last for decades, investing may be a necessity for many retirees, says J.J. Montanaro, a certified financial planner with USAA. “If you just look back at the last 30 years, a dollar has lost nearly 60 percent of its purchasing power to inflation. Investing offers a way to combat that loss of purchasing power. The key is to develop a plan that will allow you to achieve what you want to achieve without causing chronic insomnia.”
2. Work Longer
While some Americans must continue to work during retirement because of a lack of savings, others simply want to work and enjoy the social aspect of working during retirement.
Mitch Anthony debunks the old concepts of retirement in “The New Retirementality.” “A longer work life means continued engagement as well as continued paychecks,” he says. “The day you cash your last paycheck, the price of everything begins to matter. Why enter a shrinking economic reality sooner than you need to?”
Retirement today looks very different than it did decades ago, and that isn’t necessarily a bad thing. The real problem is getting over our preconceived notions as to what retirement means in today’s economy and society.
3. Invest in Passive Income Strategies
Many financial experts believe that you need several buckets of income to supplement your retirement. For example, you could have a pension, income from real estate, Social Security and an annuity to help replace the income that you had before you retired.
“Typical retirement planning is that you work like a dog for 40 years, save up and spend from principle until you exhale your last breath,” says Todd Tresidder, financial mentor and author of “How Much Money Do I Need To Retire“ and other books. “If you flip that upside-down and — rather than amassing a big pile of assets — save assets that produce cash flow in excess of your expenses, we then eliminate risks. We create perpetual income.”
Retirement is a euphemism for old-age financial independence. The core of financial independence using passive investments is that you create cash flow from investments that exceed your expenses and only spend the cash flow, not the principle balance. A passive income requires minimal input from you after you invest in it to start.
4. Invest in Annuities
An annuity is essentially an insurance product. You trade a lump sum for equal monthly or yearly payments when you invest in an annuity. For example, a $1 million lump sum payment to an insurance company could provide you with more than $40,000 in yearly payments for you and your heirs the rest of your lives. (Of course, details vary.)
“Annuities shift risks from you to the insurance company,” says Tresidder. “Retirement planning as it’s commonly practiced today is nothing more than self-insurance, where you are accepting most of the risk. Using annuities shifts market risk, actuarial risk and longevity risks from you to the insurance company.”
There are many benefits and several drawbacks to annuities. They may provide higher yields than traditional pension plans and other retirement options, but they also leave no assets for your heirs when you die.
5. Hedge Your Investments
My father-in-law retired after working as an executive for decades at a large, national bank. In addition to his pension, he held a lot of company stock that he received as options. After the financial crisis in 2008, his stock and dividends took a severe hit. The stock has recovered, but my in-laws endured several rocky years.
You can use option strategies to protect your stock positions in many cases. An option gives you the opportunity to sell or buy shares of stock with contracts at a future time at a set amount of money, instead of relying on the fluctuations of the market. If you don’t feel comfortable with options, you can enlist a financial planner to hedge your retirement investments.
6. Get Professional Help
It never hurts to get professional financial help if you are worried about your retirement accounts and if you will have enough saved for retirement. It has never been easier to find qualified financial planning — fee-only, commissioned-based, or even by the hour for giving advice without creating a financial plan.
Insurance companies do not offer retirement portfolio insurance, but there are ways that you can hedge against calamity with your retirement accounts.
Term life insurance is easy to understand. When you buy a term life policy, you are buying a promise from an insurance company that it will pay your beneficiaries a set amount if you die during the policy’s term. In exchange, you pay a monthly premium to the company for the duration of that term.
Looking for a quote? Use the form at the top of the page to compare today’s top insurance companies.
Touted for its “pure life insurance protection,” term life insurance includes none of the cash-value features found in whole life policies. Because of its low cost relative to other types of life insurance, term life continues to be the most popular life insurance choice.
Generally, you purchase life insurance to replace your income if you die, so your loved ones can pay debts and living costs. For example, if you and your spouse own a home and you were to die tomorrow, your spouse would have to pay the mortgage on his or her own. If you had the proper term life insurance policy, your spouse would receive enough money from the policy’s death benefit to pay off the mortgage.
Term insurance doesn’t just cover specific debts, however. If you have children, term insurance can provide money for college and living expenses if you die before your children are fully grown.
If you outlive your policy term, the insurance terminates and you must buy another policy if you still want to carry life insurance. However, the annual premium for another policy could be quite expensive because your older age and any health conditions will be taken into account. That’s why it’s important to choose a suitable term length early in life.
Compared to other types of life insurance, shopping for term life is simple. The necessary steps include:
- Choosing a life insurance company. Insure.com maintains a list of the best life insurance companies based on customer reviews.
- Choosing the length of the policy. Common terms include 10, 15, 20 and 30 years.
- Choosing the amount of the policy. This is the sum your beneficiaries will receive in the event of your death. The amount you choose should depend on a number of factors, including your income, debts and the number of people who depend on you financially. Many policies amounts range from $100,000 to $250,000, but higher and lower amounts are also common.
Once your policy is in place, maintaining it is a matter of paying your monthly premiums. From there, if you die while the policy is in force, your beneficiaries receive the face amount of the policy tax-free.
Medical exams for term life insurance
When you apply for term life coverage, you’ll be asked a large set of questions about your personal health history and family health insurance. The insurance company will also probably require a medical exam. Don’t be surprised if you’re asked the same set of questions more than once – first by your agent, and then by the paramedical professional who conducts the exam.
The exam typically covers your height, weight, blood pressure, medical history, and blood and urine testing. With the blood and urine tests, the insurer looks for specific medical problems and the presence of nicotine. Positive results could affect your premium, or even your ability to buy a policy.
Nicotine users will pay more for life insurance, although occasional cigar smokers may be able to get less expensive premiums. You don’t have to be a smoker to get what used to be called “smoker” rates. Anything that delivers nicotine into your system, from nicotine patches to e-cigarettes, will garner you higher life insurance rates.
Marijuana users also must disclose their drug use, but those that fail to mention this will likely be caught anyway by the medical exam.
Types of term life insurance
The calculations behind life insurance rates are all about life expectancy. That’s why life insurance costs more as you get older. You can lock in low premiums by buying a “level premium” policy. That means for the policy’s time period, say 20 years, your premium stays the same. Many term life policies give you the option to renew your coverage at the end of the term without undergoing another medical exam, although your premiums will rise annually after the level term period – often substantially.
A less popular type of policy is “annual renewable term.” This gives you coverage for one year with the option of renewing it each year for a specified duration, such as 20 years. With this policy, your rates go up every year you renew and are calculated based on the probability of your dying within the next year.
If you’d like to have term life insurance protection in place to provide for beneficiaries but you’re confident you’ll outlive the policy, you could consider “return of premium” term life insurance. Under this type of policy, if no death benefit has been paid by the end of your insurance term, you receive all your premiums back. It pays to shop around for a policy like this, but on the low end you can expect to pay 50 percent more in premiums than comparable traditional term life insurance.
If you have trouble finding life insurance because of illness or a troubled medical history, you can turn to a simplified issue term life insurance or “guaranteed issue” policy. These policies require only a few questions and no medical exam, but you pay a much higher premium in exchange for the guaranteed coverage. That’s because the insurance company takes on more risk by insuring people without knowing their medical conditions. Guaranteed issue policies often have “graded” benefits that pay only a partial benefit if you die within the first several years of the policy. A life insurance agent can search the marketplace for a guaranteed issue policy that meets your needs, but even if you have a spotty medical history, an underwritten policy like term life still could be less expensive.
If you don’t like answering a lot of questions and you want a small policy just to pay for your funeral, you might consider final expense insurance. This coverage typically pays a lower benefit than conventional term life insurance. You cannot be turned down for this type of policy, but here again you’ll pay more for that convenience.
How much term life insurance costs
According to trade group LIMRA and the LIFE Foundation, the average cost of a 20-year, $250,000 term life policy for a healthy 30-year-old is about $160 a year. That comes to less than $14 per month.
The price of your policy will vary depending on your age and other risk factors, but you should never assume that a policy is out of reach because of cost. Eighty percent of consumers misjudge the cost of term life insurance, according to LIMRA. This is especially true of members of Generation X, who overestimate the cost by 119 percent, and millennials, who overestimate the cost by 213 percent.
Choosing the right term life policy
Figuring out which term you should buy – 10 years, 20 years, 30 years or some other number – requires a review of your debts, financial needs, dependents’ needs – and when all those responsibilities might change. When will your dependents reach financial independence? What are your major debts, such as mortgages or other loans, and when must they be paid off?
It’s a good idea to review your life insurance needs carefully, both when you buy a policy and when you experience a major life change. To stay on top of your life insurance needs, you should:
- Watch your circumstances. Review your situation yearly to make sure your term life policy still provides appropriate coverage.
- Shop around. Life insurance quotes vary considerably among insurers, so do your homework.
- Sweat the fine print. An insurance policy is a legal document, so read it carefully and make sure that you understand it before signing anything.
- Be truthful. Answer all application questions accurately. Insurance fraud is a serious crime and companies treat it as such.
- Maintain your list of beneficiaries. Don’t wait to change them when it’s necessary. And tell your beneficiaries about the insurance – don’t pay for a policy that your heirs can never claim because they don’t know about the policy or the name of the insurer.
Choosing the right term life policy requires a small investment of time, but the benefits can be priceless. The first reason for this is obvious: The right policy will help care for your beneficiaries in case you die. But the second reason, which will benefit you even if you outlive your policy, is the peace of mind that comes with knowing that you and your loved ones are covered.
Some fears are hardwired into humans, and for good reason: Lightning storms, towering heights and predatory animals have signaled danger since the beginning of human history.
But what isn’t hardwired into humans is the likelihood that a given danger will be fatal. For instance, numerous people struggle with a fear of flying, though the odds of dying in an airplane crash are remote. Yet comparatively few people dread traveling in an automobile, which statistics show brings a much higher chance of death.
To put in perspective what people should really worry about, the National Safety Council (NSC) this month released a list of fatal accident types, ranked by the odds that they will bring about the average person’s demise. The results reveal that some of the things humans fear intrinsically are among the least likely to actually cause their deaths.
One caution: These odds are statistical averages for the U.S. population, which means that they do not represent any one person’s chance of dying from these things. In other words, if you ride your bike 15 miles to work each day down a busy thoroughfare, your odds of dying in a cycling accident are probably higher than the national average (1 in 4,535).
With that said, here are five frightening calamities from the NSC list that aren’t likely to kill you – along with five ordinary things that might.
No. 1: Lightning
Odds it will kill you: 1 in 164,968
There are few dangers that cause a more visceral response than a too-close-for-comfort flash of lightning (and the subsequent crack of thunder). But as a murderer, lightning has an incredibly low success ratio.
A National Oceanic and Atmospheric Administration (NOAA) study indicates that 261 people were killed by lightning in the U.S. from 2006 to 2013. Males represented 81 percent of these deaths, something that the NOAA attributes in part to males’ willingness to put themselves in more vulnerable positions in storm conditions.
So if you’re a woman, even the long odds above may overstate the dangers of lightning.
What may kill you instead: Chronic lower respiratory disease (1 in 28 odds)
No. 2: Dog attack
Odds it will kill you: 1 in 116,448
The approach of an unfamiliar dog – particularly if it’s a large or otherwise intimidating breed – is enough to prime virtually any human’s fight-or-flight system. And again, there’s good reason for this: 4.5 million people are bitten by dogs every year, according to the American Veterinary Medical Association (AVMA).
Yet fatal dog attacks on humans are very rare. The AVMA reports that 31 people died of dog bites in the U.S. in 2013.
Perhaps dogs don’t strike fear in your heart? Many other potentially deadly animals pose even less of a threat to humans. Sharks, for instance, are significantly less likely to get you than even dogs: Three people worldwide died from shark attacks in 2014, according to the University of Florida, and none of those attacks occurred in the U.S.
What may kill you instead: Overdosing on opioid prescription painkillers (1 in 234 odds)
No. 3: Commercial plane crash
Odds it will kill you: 1 in 96,566
From an evolutionary perspective, the fear of flying makes sense. Even moderate heights have always posed a threat to people, and modern aircrafts take those anxieties, literally, to new heights.
But despite a string of high-profile plane crashes in 2014 – 12 commercial aviation accidents resulted in 761 deaths, according to the Aviation Safety Network – flying remains one of the safest ways to travel long distances. In 2013, 265 people died in commercial aviation accidents, making it the safest year for commercial aviation since 1945.
What may kill you instead: Motor vehicle crash (1 in 112 odds)
No. 4: Cataclysmic storm
Odds it will kill you: 1 in 6,780
From gusting winds to flash floods, there’s no shortage of ways storms can kill you – a fact underlined by last month’s tragic storms in the Midwest, which caused at least 31 fatalities across Texas and Oklahoma.
Still, U.S. residents on the whole have a good record of guarding themselves against storms and other types of weather phenomena. The NOAA reports that 446 people died from weather-related factors in 2013, and that figure includes such varied causes as rip currents (which caused 65 deaths), avalanches (21 deaths) and even fog (1 death).
What may kill you instead: A fall (1 in 144 odds)
No. 5: Earthquake
Odds it will kill you: 1 in 179,965
What’s scarier than the earth shaking beneath your feet? When it comes to the chances it will kill you, almost everything – at least in the U.S.
While earthquakes have caused numerous deaths around the world in recent years, including the dozens killed in last month’s magnitude-7.3 quake in Nepal, the U.S. has suffered only three earthquake fatalities in the last 20 years (one from a 1995 quake in Wyoming and two from a 2003 Central California quake), according to the United States Geological Survey.
What may kill you instead: Walking down or crossing the street (1 in 704 odds)
Expect the best but prepare for the worst
To paraphrase a quote from American newspaperman Sydney J. Harris, an important thing to remember about life is that no one gets out of it alive. But that’s no excuse to take a careless attitude toward death.
June is National Safety Month, which makes it an especially inappropriate time to march carelessly into a lightning storm or offer a snarling dog a treat from your pocket – no matter how remote the chances that those things will kill you.
Moreover, even if you do practice good safety habits, it may also be a good time to examine your life insurance coverage – particularly if you have children or other dependents. A term life insurance policy can bring you peace of mind regardless of what dangers you encounter, and it may run you as little as $160 per year if you are relatively young and healthy, according to LIMRA, an insurance industry trade group.
True, some of your worst fears may not be likely to claim you. But when it comes to death, there’s little sense in tempting fate.
Cholamandalam MS General Insurance Company (Chola MS) is a joint venture of the Murugappa Group & Mitsui Sumitomo Insurance Company Ltd, Japan.
Chola MS is part of the Rs 73.4 Billion Murugappa Group, one of India’s largest family-promoted, professionally managed corporate with over 28,000 employees.
A pioneer and market leader in several fields with over 40 manufacturing operations across 12 States in India, the group has a strong presence in farm inputs (Parry, Coromandel Fertilizers and Godavari Fertilzers) engineering and cycles (TI BSA & Hercules), Sugar EID abrasives (Carborundum), finance (Cholamandalam DBS), sanitary ware (Parryware), plantations, bio products and nutraceuticals.
Mitsui Sumitomo is the second largest Insurance group in Japan, with a Net Written Premium (NWP) of 13.5 billion USD in 2005. The company has 733 Sales bases, 257 claims handling offices and about 74, 664 Agents throughout Japan.
While insurance must cover you for major illnesses, we firmly believe that the probability of common diseases is far greater than major illnesses. That’s exactly why Chola Health Insurance helps you manage not just major but also minor illnesses that could occur at any point and without notice. Add to this wide cover a cash free hospitalization benefit that lets you financially manage any sudden illness more effectively.
In addition, with simple procedures and smoother claim processes you can be sure that Chola Health Insurance is the perfect way to manage any health crisis that might come your way.
Tired of paying too much for your car insurance? If so, you’re not alone.
According to J.D. Power, car owners got hit with average increases of 35 percent — $153 — on their car insurance premiums last year. And that was up from an increase of $113 in 2012.
As rates reach for the sky, more car owners are reaching out for options to control their costs. And according to consumer financial website NerdWallet, one option you should look hard at this year is usage-based, or “pay-as-you-go” car insurance.
The 411 on Usage-Based Insurance
Usage-based insurance is a relatively recent innovation. The National Association of Insurance Commissioners describes it as a way to align the premiums that drivers pay with the amount and manner they drive, “making premium pricing more individualized and precise.”
The basic idea is that the less you drive, the less chance your car will be damaged while driving — and so the less you should pay to insure against the risk of such damage. Similarly, the better you drive — e.g., by driving “gently,” obeying the speed limit, and neither accelerating nor braking too precipitously — the less you should be charged.
The question is how to prove to an insurance company that you drive little enough, and well enough, to deserve a discount. And the answer to this question is telematics.
Big Insurer is Watching You
Telematics refers to new advances in technology that permit an insurer to monitor how a driver drives. It basically boils down to you, the driver, permitting your insurer to install a GPS monitoring device in your car that records how the vehicle is driven over a period of time.
GPS technology has the ability to track both how far a car travels over time and how fast the it’s being driven. By comparing these two data points, GPS telematics can also tell how quickly a driver accelerates and brakes.
All of this can give an insurer a good picture of how aggressively or carefully the car is being driven, allowing the insurer to better calibrate how “risky” it is to insure the driver.
What’s in It for You?
NAIC thinks that within the next five years, enough insurers will offer telematics to have 20 percent of cars on American highways covered under usage-based insurance plans. But why would you want to participate?
To be blunt, if you’re a bad driver with a lead foot and a need for speed, you probably won’t want to have anything to do with telematics. But for good drivers, it could be a great way to reduce the cost of car insurance.
FC Business Intelligence, which runs an informational website on telematics, estimates that good drivers buying insurance from Progressive (PGR), for example, can save as much as 30 percent by installing the company’s Snapshot telematics device in their cars, and providing data to Progressive on the number of miles they drive, how often they drive late at night, and similar information. Progressive provides the Snapshot device free to policyholders.
Drivers insured by State Farm could save even more. The Telematics Update website suggests that discounts based on the driver (age, occupation and place of residence) and data from the company’s Drive Safe & Save telematics program can add up to as much as 50 percent off base insurance rates.
Mind the Fine Print
Not all usage-based insurance programs are created equal, so pay attention to the details before signing up.
State Farm, for example, offers its UBI program in partnership with General Motors’ (GM) OnStar service, and with Ford’s (F) Sync. But if you don’t subscribe to either, you’ll need to subscribe to a third service, called “In-Drive” — and pay a $7 monthly fee for use of its telematics device. The first year of the service is free — but after that first year, fees could eat into any savings on your insurance premium.
That is, assuming you drive gently enough to receive any savings at all.
Motley Fool contributing writer Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Ford, General Motors, and Progressive. The Motley Fool owns shares of Ford.
It’s no great secret that across the nation, insurance premiums are on the rise. Over the past five years, the cost of insuring a home against fire and other casualty has crept up about 10 percent a year — every year. Health insurance increases, while they’ve been muted of late, still rose 4 percent this year.
But if you think those hikes are steep, get a load of this next one.
Congratulations! You’re a Father! (Now Open Your Wallet)
Kids are expensive. If you’re a parent, you know this already. If you’re a parent of a kid who hasn’t turned 16 just yet, you’re on track to get another lesson in how expensive they can be. Because once your offspring passes the driver’s test and receive a license to drive from the state, he’s going to need to be insured — and that will cost you an extra $2,000 a year, on average.
(By the way, if your kid is getting her driver’s license, your wallet won’t take quite as big a hit, girls being 25 percent less expensive to insure than boys on average. But it’ll still be some serious coin.)
According to the National Highway Traffic Safety Administration, driving is a risky activity for teens. The are more prone to get into accidents — about four times as likely as older, more experienced drivers, according to the Centers for Disease Control. And traffic accidents are the leading causes of death for Americans ages 16 to 19.
Between lives lost and property destroyed, this all makes insurance companies very wary of insuring teen drivers. And when they do agree to insure a teen, they make you pay through the nose.
According to a recent report posted on Bankrate.com’s (RATE) InsuranceQuotes.com, across both genders, all age categories, and all 50 states, parents pay an average 84 percent more for their car insurance after adding a teen to their policy.
Stay Between the (State) Lines
Think that’s bad? It might get worse.
Unless you’re fortunate enough to live in a state like North Carolina or Hawaii, where legislators have passed laws that ban setting insurance rates based on factors such as age or gender, your rates may rise by more than the average 84 percent.
How much more? Take a look at the top 10 states hiking rates on teenage drivers by 100 percent and higher:
New Hampshire: 100.56 percent
Louisiana: 100.58 percent
Arizona: 103.65 percent
Washington: 104.66 percent
Maine: 105.23 percent
Idaho: 106.74 percent
Alabama: 110.61 percent
Wyoming: 112.11 percent
Utah: 114.62 percent
Arkansas: 116.34 percent
That’s right. Put a teenage driver on your policy in any one of these states, and you can expect to see your insurance cost for the whole family more than double.
The news is even worse for parents in Louisiana. Although its teen drivers bring “only” the ninth highest rate hikes with them when they join a policy, Louisiana car insurance in general is already the most expensive in the land — averaging $2,699 annually for a single male driver, according to Insure.com. Add a kid to that policy, and you’ll be shelling out upwards of $5,400 a year.
What’s to Be Done?
Is there any way to beat the system, and avoid these hikes? Not entirely, no.
Sure, you could move to Hawaii, where insurance rates rise least. Then again, Hawaii also has the honor of hosting the nation’s most expensive housing market — so you’ll end up seriously out of pocket, one way or the other. On the other hand, North Carolinian insurance rates don’t rise so much when you put a teen on your policy. That market might be worth a look, if you’re willing to move to save money.
Patience Is a Virtue… That Pays
One solution suggests itself from InsuranceQuotes.com’s offhand observation that certain teens cost more to insure than others.
In particular, if you put a kid on your policy as soon as he hits 16, well, new 16-year-old drivers tend to double an insurance bill no matter where they live, averaging 99 percent rate hikes.
But premiums tend to rise less when teens wait a bit before trying to drive. 17-year-olds joining their parents’ policies average a 90 percent increase. 18-year-olds cost 82 percent more. By the time Junior is age 19 and ready for college, the rate hike is “only” 65 percent.
Meanwhile, the standard caveats still apply: No one’s forcing you to accept “average” rate hikes, so now that you know the “average” scenario, shop around to see if someone will offer you a better deal. Ask if taking (and passing) a safe driver course might reduce your teen’s rate. And of course, since we’re talking student-age kids here, make sure to inquire about discounts for good students. Whether or not it makes sense, insurance companies — like grandparents — often favor kids who bring home A’s.
The worst nightmare that anyone can have is when a family member is hospitalized without health insurance coverage. Here is an example…
‘A noteworthy businessmen Mr.Rao always dreamt big. Small and minor achievements seldom quenched his thirst for accomplishing big things in life. Over the years he proved his merit and escalated new heights of success. Coveted awards and accolades flooded him. As a shrewd businessman he was planning for health insurance before the formidable tax month of March. The decision was postponed by a month due to several reasons. Rao was busy with his commitments and the insurance advisor who contacted him was also busy with his clients.
The dreaded day
On a sunny morning as Rao was driving towards his office a lorry driven by a drunken driver crashed on his vehicle and he rammed against a wall of a house and lost consciousness…Today Rao is not able to use his hands and legs effectively and within a year his financial position dwindled due to mounting hospital expenses and continued absence from business. None of the insurance companies are ready to give him a health policy at this stage.’
We live in the world of uncertainty. Sometimes a seemingly small ailment can turn into a major one. In a moment life can come to a grinding halt if you are involved in a major road traffic accident. And the situation is worse when the earning member of your family is hospitalized! But with a health policy you and your family can be rest assured and have some security!
Poor quality of service is rendered to the citizen by government hospitals while private medicare has become exorbitantly expensive; it is mandatory for a middle class person to seriously consider the option of health insurance.
A major surgical operation of the heart may cost anywhere between two to three lakhs today. Not many individuals can afford to spend out this amount in a short and sudden situation. Even if they have insurance that is reimbursable under their Mediclaim plans the strain on the family can be immense. The option of cashless hospitalization becomes attractive under these circumstances.
The entry of private players has stirred fierce competition, ultimately benefiting the consumer thereby heralding a new era in health insurance. The advent of foreign and private players into the life and general insurance sector has directly resulted in the huge development of insurance market including significant increase in medi-claim insurance. With the Indian middle-class population almost similar to the total population of United States, India looks attractive for business opportunities to international players in this field.
This is the ideal time to look at the health insurance market and make the best of what is available.
The insurance business professionals strongly say that the limitless medical insurance market has not been fully tapped so far due to lack of awareness among the public about the importance of health insurance and also due to the lack of rightly targeted policies from the companies. An appropriate policy has the potential to rope in more than 2 million customers.
From the old fiction about red cars costing more to insure, to the one about rates dropping when you turn 25, to the idea that “full coverage” means you get a new car after a crash, myths about car insurance abound. And they’re easy enough to take at face value — until you look at the facts. Not falling for these eight insurance fables could save you some cash.
1. “Full coverage” will get me a new car if I crash. Your auto repair shop may thank you for having collision and comprehensive coverage, because they’ll get paid by your insurer for fixing your car. But however you define “full” coverage, it won’t equate to you getting a new car after you crash. Insurance is meant to put you back to where you were, not improve upon it, so you won’t be getting a better car than you had.
If your car insurance agent tells you that you have “full coverage,” ask what that entails. It could include liability, property damage and rental reimbursement, says Shane Fischer, an attorney in Winter Park, Fla. “Unfortunately, most people who claim to have ‘full coverage’ are people of modest incomes who buy the cheapest policy their state legally allows,” he says. “This can leave them without uninsured motorist coverage if they’re a victim of a hit and run, without a rental car if theirs is damaged in a crash or personally responsible for thousands in medical bills if they don’t have enough liability coverage.”
Full coverage isn’t an insurance term agents use, says Adam Lyons, CEO of The Zebra, a digital auto insurance agency. Collision insurance covers damage to your vehicle in an accident. Comprehensive covers non-accident damage, such as from theft and fire. If you want medical coverage and other protections, you’ll have to spell that out for your agent, Lyons says.
2. My rates will go up if I get a traffic ticket. Not always, says Matthew Neely, owner of Eco Insurance Group in Las Vegas. A client who has six speeding tickets in the past three years hasn’t had his rate go up, he notes.
Here’s how it works, Neely says: Some companies only ask for a record of an applicant’s driving history when he or she first sign up for a policy. Motor Vehicle Reports cost $3 to $28, depending on the state. “These charges can get very expensive for insurance companies, so a lot of the time the carrier will randomly select households and run the MVRs,” he says. “If you are lucky enough, the insurance company will not find out about your speeding habit. However, if you let your insurance lapse, get into an accident or change insurance carriers, the carrier will run the MVR.”
3. Thieves prefer new or fancy cars. Not true, points out Lyons. Of the 10 most frequently stolen cars, the most stolen in 2012 was the 1996 Honda Accord, according to the National Insurance Crime Bureau. You might have the latest and fanciest car, but a 1996 Accord is preferable for catalytic converters and other parts that are more in demand. To protect your car against theft, get comprehensive insurance.
4. My red car will cost more to insure. False. Insurers don’t care what color your car is and they don’t ask for that information. Police might spot a speeding red car quicker than a white one, but an insurer factors in other aspects of your car, such as model, make, year and engine size.
5. The longer you are with an insurance company, the lower your rate will be. This is half true, Neely says. Longevity discounts are sometimes offered to policyholders, but it doesn’t shelter them from increased costs, he says. “Most of the time, the moment you make a claim, this discount will disappear, and it does not guarantee your rate will not increase,” Neely says.
6. My credit score has nothing to do with my car insurance rate. In most cases it’s the biggest factor of determine your rate, right after your driving record, Neely says. Studies have shown that individuals with good credit get in fewer accidents, he says, though insurers in California, Hawaii and Massachusetts can’s use credit as a rating factor.
7. No fault means I am not at fault. In most states “no fault” simply means that each insurance company involved pays for their respective policyholders injury-related bills, regardless of who is at fault, Neely says. This helps keep the overall cost of car insurance down.
8. Rates drop at age 25. Rating factors vary by state, but in North Carolina, the myth is wrong because age isn’t a factor in pricing, says Jonathan Peele, president of Coastline Insurance Associates of North Carolina. Instead, insurers use the years of experience to determine the rate. Once the driver has more than three years of driving experience, the insurer can’t surcharge the premium, he says. Less experienced drivers are charged more for car insurance because they have a higher risk.
No one enjoys getting stopped by a cop for speeding.
It’s embarrassing. It also defeats the purpose of speeding in the first place. You sit by the side of the road, twiddling your thumbs, watching the minutes tick by. This is the opposite of “speeding” to your destination.
Plus the ticket. According to U.S. Highway Patrol data cited by Statistic Brain, Americans pony up $6 billion for speeding tickets every year — an average of $150 per violation.
And your insurance company wants its cut as well.
Costly Rules of the Road
A recent study by Bankrate (RATE) subsidiary insuranceQuotes.com reveals how much you can expect your insurer to ding you for violating traffic rules.
Crunching insurance data on a hypothetical 45-year-old married, college-educated, employed female with a clean driving record and excellent credit, driving a 2012 sedan when caught for speeding, IQ discovered that a single moving violation can raise a driver’s insurance premium by as little as 21 percent (for speeding 15 mph or less over the limit) — or by as much as 82 percent, for speeding to such an extent as to constitute “reckless driving.”
Other violations and the financial hit examined by IQ include:
Seat belt violation — 5 percent hike to insurance premium on average.
Driving solo in the HOV lane — 18 percent.
Failure to signal a turn or lane change — 19 percent.
Tailgating — 19 percent.
Driving drunk — 93 percent.
These higher rates can stick around for as long as three years after you get caught.
Surprisingly, these rate hikes aren’t even the worst news. The really bad news may be this: The insurance companies appear to be using traffic violations as an excuse to hike rates — perhaps even more than necessary.
For years, we’ve been telling you about how insurance companies have been hiking rates in response to a weak stock market and low returns on their bond investments. Insurers depend on the profits from investing their premiums to raise money to pay out insurance claims down the road. When those investment gains don’t materialize, though, the insurers must raise money by raising premiums.
From the insurer’s perspective, this makes sense. But from a consumer’s perspective, it does appear that the insurance companies may be going a bit overboard.
As recently as one year ago, a similar study of insurance costs by IQ found that, for example, exceeding the speed limit by less than five miles per hour usually bumped insurance rates up only 5 to 10 percent. Even a 30 mph violation resulted in no more than a 15 percent hike in insurance premiums.
InsuranceQuotes.com notes that there’s no direct, apples-to-apples way to compare these two reports. Last year’s survey, for example, was derived partly from polling speeding ticket recipients about their experiences and partly from data provided by the nonprofit Insurance Information Institute. However, they went straight to the source for this year’s report, mining data that carriers filed with state insurance commissioners and provided to Quadrant Information Services.
But still, quirks and caveats aside, the magnitude of the difference in fines cited in the two reports suggests there’s been a sizable increase in rate hikes imposed for traffic violations over the past year.
How to Dodge the Bullet
Go back to driver’s ed. insuranceQuotes.com senior analyst Laura Adams has one suggestion: “Drivers who commit moving violations can take safety classes to improve their skills and remove blemishes from their records. Many of these courses are offered online and can be completed in just a few hours.” Importantly, these defensive driving classes can also take away an insurance company’s excuse for hiking your rates.
Shop around. Just because one company thinks your speeding ticket should cost you more money doesn’t mean everyone will want to put their hand in your pocket. Indeed, in exchange for winning a new customer, another insurer may be happy to overlook your offense. While you’re at it, consider your coverage.
Double down. If you love your current insurer, you may not have to switch. Michael Cicero, a veteran municipal prosecutor in Ohio, points out that you can sometimes avoid rate hikes for minor offenses when you have bundled coverage (e.g., homeowner’s and auto insurance from the same company). This spreads the risk to the insurer among multiple areas, diminishing the importance of any one. Plus, because the insurer is is getting more business from a bundled policy — and wants to keep you as a customer — you may have an easier time getting the company to forgive a ticket and keep your auto premiums the same.
Of course, the easiest way to avoid all of this is to obey the rules of the road. When you’re tempted to speed, ask yourself if it’s worth the price of a ticket and a hike in your insurance premium.
Motley Fool contributor Rich Smith and the Motley Fool has no position in any of the stocks mentioned.
Have your auto or homeowner insurance rates been creeping up? If so, you may have been “POed.”
According to the Consumer Federation of America, some insurance companies are secretly “price optimizing” customers — charging them a higher rate for no other reason than they think the customer won’t shop around for a better deal. “Price optimization is a data mining tool used by insurers to charge higher premiums to those consumers least likely to shop for a new policy in the face of a rate increase,” says the federation.
How do they know whether you are likely to shop around? For now at least, that information isn’t public. “I don’t know what’s in the black box,” says Bob Hunter, director of insurance for the federation, which unites nearly 300 nonprofit consumer organizations. But he notes that insurance companies typically can review credit report data, information provided on applications and a host of other data available from third-party sources about current and prospective customers.
As an actuary, Hunter says he first heard of this practice when he participated in an industry webinar touting the benefits to insurers of pricing policies this way. He subsequently reviewed industry information that indicated this is not an isolated practice. When insurers use a price optimization tool, “if you are in a group that shops less, you are going to pay more,” he says.
The federation and other consumer groups are asking regulators to stop insurance companies from using price optimization techniques when setting rates and premiums.
Julia Angwin, whose book “Dragnet Nation: A Quest for Privacy, Security, and Freedom in a World of Relentless Surveillance” revealed many ways companies track consumer information and use it to increase profits, sees this as one example of the way our own information can be used to get us to pay more. “All the ingredients are there for … charging the prices consumers can bear,” she says.
What Does This Mean for You?
If you’ve been POed, how do you fight back? One way is to call the bluff. If your rate goes up, shop around. Better yet, shop every time your policy comes up for renewal, even if you think you have a good rate.
The federation recommends that consumers start by using the rate comparison tool available from their state insurance commissioner to identify the six insurance companies with the lowest rates for the sample profile closest to yours. Then use the NAIC complaint database to narrow down your choices to the four companies with the lowest level of complaints. Once you have your list of four, contact each one for a quote.
That’s what I had to do when my auto insurance rates started to climb, even though I had been with the same insurance company for more than two decades, and my husband and I had good driving records. We switched. A year later, the new insurer raised our rate substantially for no apparent reason. My old insurance company kept sending me letters asking me to come back, and when I responded, they offered me a rate well below the one I was paying before I left.
That car that’s supposed to provide you with the freedom to get you where you want to go may also be one of the many chains tying you down to a job you’d rather ditch. That’s because — over the course of a lifetime — the average person will spend more than three years at work just to pay for their various sets of wheels.
The folks at eBay Deals recently released a “Trading Time” calculator that lets you figure out how long you have to work to pay for various expenses. It’s an eye-opener.
Over a 50-year working lifetime, the typical person will work 157 weeks to generate the cash needed to pay for his or her cars. Then, add in another 50 weeks of work to cover car insurance. Those figures are based on the weekly median gross income. Yours may be higher or lower, of course.
If that doesn’t seem like a lot to you, then think about this: You work even longer to pay for your vehicles because you need to figure in taxes and the interest on your car loans. And don’t forget all the time in that vehicle commuting or shuttling your kids around.
According to the Trading Time calculator, other major expenses that keep you chained to your desk may include shoes (17 weeks), phone bills (60 weeks) and even toilet paper (two weeks).
Whether you love your job, hate it or or fall somewhere in between, it’s helpful to think about the things you spend money on in terms of the amount of time you have to spend working to pay for them. Only you can decide what’s really worth it.
Can You Get Back Some of Your Time?
Of course you may have no choice but to drive, and in that case, you may want to look for ways to try to reduce your costs. For example, can you drive a slightly used car instead of a new one? Keep your vehicle longer? Settle for a more economical model?
Another way to cut costs is to improve your credit. With a better credit score, you will qualify for a lower interest rate, which can mean significant savings over the life of the loan. You can see your credit scores for free at Credit.com to determine whether your credit is good. Ideally, you want to review it at least a month before you plan to shop for a vehicle in order to address any issues you uncover. (Give yourself more lead time if your credit isn’t great. Here’s a guide to help yourebuild your credit. )
Here’s an example of the savings you may achieve by boosting your credit. As of June 4, the lowest quoted rate for a $20,000 50-month auto loan with excellent credit on Credit.com is 1.99 percent. That translates into a monthly payment of $411. But for someone with poor credit, the rate jumps to 14.99 percent or a monthly payment of $540.
There’s a lot to take into account when buying a new vehicle. How it feels and looks is important, but how much it costs — including fuel consumption, potential resale value, and monthly auto insurance premium — is usually the deal breaker. To help buyers determine which cars are truly the cheapest, Cheapism.com turned to a recent comparison of insurance rates for more than 1,500 vehicles by Insure.com.
This list of the 15 cheapest cars to insure reflects the annual cost of full coverage by six major insurers for a 40-year-old male driver with good credit, a clean record and a 12-mile commute in 10 ZIP codes in each state. Unsurprisingly, family vehicles that are typically driven by cautious parents are cheaper to insure than flashy sports cars, but other affordable models may not be what you expect.
Jeep Wrangler Sport: $1,134 a Year. The least expensive standard model Wrangler on the market, this two-door, 4×4 SUV is notable for its 3.6-liter Pentastar V6 engine and iconic looks. This model also recently ranked first in terms of resale value for compact SUVs. (It retains 57.4 percent of its original list price of $23,500 after five years.)
Jeep Patriot Sport (2WD): $1,136 a Year. Cheaper (starting at $16,895) and roomier than a Wrangler, the two-wheel-drive Jeep Patriot is better suited for family driving than off-roading. Cruise control and 16-inch wheels are standard, but the Sport package lacks power accessories and air conditioning. Car site Edmunds.com asserts there are better options for consumers than the Patriot, citing drawbacks such as insufficient storage space, disappointing ride quality, and lackluster basic options.
Honda CR-V LX (AWD): $1,160 a Year. The LX is the simplest of the available trim packages but still comes with a rearview camera and hands-free text messaging. All CR-V models are powered by a 2.4-liter, four-cylinder engine, although the all-wheel drive included in this model is an upgrade. The CR-V ranked best in a U.S. News & World Report list of affordable compact SUVs and starts at $24,695. The review highlights a spacious interior, responsive steering, and good fuel economy.
Dodge Grand Caravan SE Plus: $1,162 a Year. The top-ranking minivan on the list, the Dodge Grand Caravan carries a mixed reputation but offers some features consumers may like. The second and third rows of seats can be laid flush with the floor, creating plenty of cargo space and the rear seats can be flipped to face the back for tailgating. The SE Plus starts at $25,245; the cheapest trim package, the AVP, starts at $21,795. This is the last year the Caravan will be available; Dodge is dropping it from the lineup.
Honda Odyssey LX: $1,163 a Year. The Honda Odyssey minivan is a favorite among car critics, although at $28,975, it’s more expensive than others on this list. Still, it’s noteworthy for its smooth handling, quiet and comfortable ride, safety rating, and fuel efficiency (for its class). The LX is the base model but still includes a rearview camera, Bluetooth, Pandora compatibility and power-adjustable front seats.
Jeep Compass Sport (2WD): $1,164 a Year. This third Jeep model on the list, like the Patriot Sport, is less expensive than a Wrangler, at $18,995. It’s also less Jeep-like, in that off-roading may just be off-limits for this front-wheel-drive model. That doesn’t mean it’s not a good compact SUV, though; it gets decent reviews from experts at Edmunds and The Car Connection, a review and research site.
Subaru Outback 2.5i: $1,176 a Year. The 2015 Outback has been redesigned and offers a roomy interior, sleek body and precise steering. All Outbacks come standard with all-wheel drive, making this a suitable vehicle for outdoor adventures. Motor Trend concludes that the 2015 Outback is bigger and handles better than the competition. The 2.5i is the base model and starts at $24,895.
Ford Edge SE (2WD): $1,176 a Year. A mid-size crossover that seats five, the Ford Edge SE is comparable to the Honda CR-V LX, according to The Car Connection, (although this model has front-wheel drive). Other reviewers appreciate the high-quality look and feel, EcoBoost engine and quiet ride. This base model has a list price of $28,100.
Smart Fortwo Pure: $1,186 a Year. The Smart Fortwo is a two-seater car about half the size of a sedan, which makes finding a parking space amazingly easy. But the same $13,270 and up that you’ll spend for this model can buy a more comfortable ride that isn’t scary to drive on a freeway. The Pure package is bare-bones, although there are options for power windows and mirrors ($80), radio ($350) and power steering ($550). Air conditioning comes standard.
Ford Escape S (2WD): $1,190 a Year. One of the best-selling crossovers on the market, the Escape stands out with its styling and acute handling. Reviewers say it’s fun to drive on winding roads, although it can feel a bit firm at times. Even the basic S trim level (starting at $22,960) comes with full power accessories, six-speaker sound system, air conditioning, rearview camera and Ford’s Sync voice command system.
Nissan Xterra X (2WD): $1,200 a Year. Based on a shared Frontier pickup platform, the Nissan Xterra (starting at $23,660) boasts the same easy-to-clean interior. The Car Connection notes that owners give up some comforts (those easy-to-clean surfaces are hard plastic) but get a vehicle that’s versatile, spacious, and ready for off-roading.
Dodge Journey AVP: $1,201 a Year. The American Value Package, the base model, starts at $20,295 and is a good budget option for consumers seeking a midsize crossover. The Journey AVP seats five, but an optional third row adds an additional two seats. The four-cylinder engine can feel strained, but it’s the only option available at this trim level.
Buick Encore: $1,205 a Year. The Buick Encore, a subcompact crossover, is slightly larger than a standard hatchback and feels more luxurious than the competing Honda HR-V, Mazda CX-3 and Jeep Renegade, but there’s no need to pay for a luxury marque. The Encore is available for $24,065 and up. There are five seats, but in reality it fits only four adults comfortably. Reviewers also say the 1.4-liter engine doesn’t have enough oomph, or the fuel efficiency one might expect from a small-engine subcompact; they like just about everything else.
Chevrolet Spark LS (Manual): $1,206 a Year. The Chevy Spark is a four-door hatchback that works well for city drivers and is kind to the pocketbook: This model’s MSRP is just $12,270. Despite being small and light, the Spark feels and drives like a “real car,” Edmunds says. This practical car seats four and gets up to 40 mpg. The basic LS trim comes with air conditioning, power windows and a four-speaker sound system.
Toyota Tacoma Access Cab (2WD): $1,210 a Year. The only pickup on this list is a leader in the compact/midsize class. The Tacoma isn’t as powerful nor as comfortable as a full-size but is known for durability and does well when stacked against the competition. The basic, two-door Access Cab version comes with a 2.7-liter, four-cylinder engine, air conditioning, manual transmission and two rear seats that are best suited for children. It’s an easy pickup to drive, but with a starting price of $20,965, it’s more expensive than comparable models.
Rajat Shah recently faced a tricky situation of reduced claim settlement in spite of having two health insurance policies. The poor guy had taken two health policies for getting adequate coverage, but he was not aware that both the insurers (new and existing) needed to be informed about the other policy.
Like Rajat many people are not aware about the proper disclosure of the existing health covers and, therefore, more often than not face similar issues. In fact, one must be aware of the fact that while taking health insurance, one is required to fill up proposal forms, wherein the insurer asks for disclosure of any existing policy. The main purpose of asking this is because there is a contribution clause in most policies. Although the norms regarding the contribution clause have slightly changed recently, but before we could discuss that, let us first understand what a contribution clause actually is.
The contribution clause means that for the same ‘insured interest’ if there is more than one policy, then in case of any claim situation all the policies will contribute in equal proportion to the sum insured.
For example, suppose a person has two health policies for Rs 1 lakh and Rs 2 lakh each and he makes a claim of Rs 50,000. In this scenario the insurers will pay Rs 16,666 (policy with Rs 1 lakh sum insured) and Rs 33,333 (policy with Rs 2 lakh sum insured), respectively.
“We are finding more and more similar cases mainly due to steep increase in medical cost, which triggers the need for higher sum insured limits. Since most insurers are usually reluctant to issue policies beyond a certain limit of sum insured, depending on the age and the underwriting guidelines of the company at the time of renewal, the insured therefore has no choice but buy a second policy,” informs Pavanjit Singh Dhingra, CEO, Prudent Insurance Brokers.
One may also go for another policy or policies if, suppose, one is having a policy provided by one’s employer and the coverage is not adequate for the entire family. One may also like to have separate policies for one’s parents as well as for one’s spouse and kids. There may be, thus, many reasons for which one would like to go for multiple health covers.
Whatever be the case, however, only buying multiple policies is not enough. You also need to know how to use them efficiently and the procedure of making a claim, otherwise you are also likely to face the situation of reduced claim settlement like Rajat.
For instance, you need to inform about the existing policy or policies to the other insurer(s) while buying a policy or making a claim simply because if you do not disclose this fact, you are violating the terms and conditions of the health insurance contract and in case of investigation this could be termed as mis-representation.
“If a customer is holding more than one health policy, he has the choice to prefer the claim with any of the insurers. For example, if he holds an individual health policy with Insurer X and a group health policy with Insurer Y, he may choose to make his claim with any of the insurers,” says Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance Company Ltd.
However, “it is mandatory that he declares the other policy or policies held by him in the claim form with the claiming insurer because the insurer on whom the claim is preferred has the right to invoke the condition of contribution (sharing of the claims in proportion to the sums insured under their respective policies) with other insurer(s),” adds Bimbhet.
Explaining further, Bimbhet says that in a scenario where the customer holds two policies for Rs 2,00,000/- each with Insurer X and Y, and he has a claim of Rs 3,00,000/, the insured can choose to claim Rs 2,00,000 from one insurer (by submitting all his originals) and take a settlement certificate from the first insurer and claim the balance with the second insurer with the photocopies of the claim documents.
It needs to be mentioned here that there have been some changes in the rules regarding claiming from multiple insurers. Prior to these rules, any claim from multiple insurers had to be in the ratio of coverage and you had to inform all the insurers while making a claim. But as per the new health insurance regulations, which came into effect just a few months back, the contribution clause will not be applicable if your claim amount is less than the sum assured of the insurer where you are claiming. And only if your claim amount is above the sum assured of the policy, the insurance company is allowed to impose the contribution clause.
Luxury sedans generally aren’t cheap to buy, but buyers of some models may be pleasantly surprised when they get their first insurance bill.
According to a new Insure.com analysis, some well-appointed sedans come with insurance costs up to 20 percent below the average annual premium for all 2015 vehicles ($1,555).
Why do these cars cost less to insure than other, more modestly equipped vehicles? In part it’s becausecar insurance rates are tied closely to your model’s history of insurance claims — a helpful thing when careful drivers favor your type of vehicle.
“These are expensive sedans that are probably bought by older, more mature drivers, and I think that (reduces) their insurance rates,” says Scott Oldham, editor-in-chief of car-buying site Edmunds.com. “You’re not going to see a lot of teenagers driving these models around.”
Robert Hartwig, president of the Insurance Information Institute, says luxury models can have surprisingly low premiums for several reasons, including:
- They not only typically attract older buyers with better driving records, but generally appeal to well-heeled consumers who live in safe neighborhoods and garage their cars — two factors that reduce thefts.
- Luxury sedans usually score well on crash tests, which means they tend to cause fewer injuries and less damage in accidents. Several of the models below enjoy top crash-test ratings from the Insurance Institute for Highway Safety (IIHS).
- Many luxury models have state-of-the-art safety systems that help prevent accidents in the first place.
“All of these factors can contribute to below-average insurance costs,” Hartwig says.
Read on to see five 2015 luxury sedans that come with better-than-average annual premiums, according to the Insure.com analysis. All of them are cheaper to insure than, for example, the humble Mitsubishi Lancer SE.
(Unless otherwise noted, all premiums, amenities and manufacturer’s suggested retail prices refer to each model’s base trim line. The insurance premiums are a national average; your state may be more expensive or less.)
No. 5 cheapest luxury sedan to insure: Lincoln MKZ
Average annual premium: $1,548
The IIHS rates the $35,190 MKZ as a Top Safety Pick, meaning it’ll likely perform well in a crash — which is partly why the model enjoys low insurance costs.
Beyond modest premiums, Oldham says the Lincoln scores high marks for active-suspension and noise-canceling systems that team up to produce smooth, quiet performance. “The MKZ rides very well and is quite refined,” he says.
Base models also come with a long list of upscale features, from heated seats to an 11-speaker stereo. Under the hood, the MKZ sports a 240-horsepower four-cylinder turbocharged engine.
No. 4 cheapest luxury sedan to insure: Toyota Avalon Limited
Average premium: $1,510
The Avalon not only rates as an IIHS Top Safety Pick, it’s also the only low-premium luxury 2015 sedan to garner an “A” grade from Edmunds editors. Additionally, it’s one of just two luxury four-doors with ultra-low premiums to make Edmunds’ Top Recommended Sedans list.
“The Avalon is one of the best full-sized sedans on the market,” Oldham says. “We think it has a very good combination of style, comfort, a large trunk, a lot of engine power and good fuel economy.”
Base models start at $32,285, while the top-of-the-line Avalon Limited lists for $39,980. Both offer lower-than-average insurance premiums — $1,460 for the entry-level Avalon and $1,510 for the Limited version.
The Avalon Limited comes standard with a back-up camera, a JBL premium stereo and other upscale amenities. Mechanically, it features a 268-horsepower V-6 engine.
No. 3 cheapest luxury sedan to insure: Acura TLX
Average premium: $1,486
The $31,445 TLX is another low-premium luxury four-door that makes Edmunds’ Top Recommended Sedans list.
An all-new model, the TLX also gets an IIHS Top Safety Picks Plus rating, which means the car not only has excellent crash-test results, but gets extra credit for its optional collision-warning and automatic-braking systems.
Entry-level TLXs have a wide variety of upscale amenities, from a sunroof to a seven-speaker sound system. Base models offer a 206-horsepower four-cylinder engine — that’s what the premium above is based on — but the 290-horsepower V-6 option bumps the average annual premium to $1,530, which is still better than average.
“The TLX is a luxurious vehicle that comes packed with technology and lots of features for the money,” Oldham says.
No. 2 luxury sedan to insure: Buick LaCrosse Premium II
Average premium: $1,391
Buick’s flagship sedan combines style and comfort with low premiums and a relatively affordable price — $31,065 for the entry-level LaCrosse 1SV and $39,970 for a top-of-the-line Premium II.
“We think the LaCrosse is a very well-rounded large sedan,” Oldham says. “It pampers its occupants, it drives well and its V-6 engine (standard on most trim lines) has plenty of power.”
The LaCrosse Premium II also has lots of luxuries, from 4G LTE WiFi connectivity to an 11-speaker Bose audio system. Its V-6 power plant puts out a very respectable 304 horsepower.
No. 1 cheapest luxury sedan to insure: Infiniti Q40
Average premium: $1,244
Another new model for 2015, the Q40 mixes a relatively modest $33,950 starting price with tiny insurance premiums.
That’s partly because the Q40 is basically a 2013 Infiniti G37, back after a one-year hiatus. Oldham says Nissan — the owner of Infiniti — replaced the G37 in 2014 with the Q50 sedan, but decided to revive the less-expensive G37 this year under a different name.
“The Q40 represents a high value for shoppers,” the Edmunds expert says. “But it’s also an older design, so it’s not as compelling as some of its up-to-date competition.”
All Q40s come with leather upholstery, a six-speaker audio system and other luxury accoutrements. The model also features a 328-horsepower V-6 engine.
No surprises please
As the varied list of cars above suggests, it’s not necessarily easy to look at a group of similar autos and find the cheapest ones to insure.
“You can’t typically see the factors that help a car attract low insurance rates,” says Robert Beaupre, managing editor for Insure.com. “The real indicators are often buried in insurers’ actuarial tables, so the only way to know what kind of insurance costs you’re facing is to do your homework by getting quotes before you hit the dealer.”
To see average insurance rates for the 1,500 2015 vehicles in Insure.com’s database — including rates specific to each U.S. state — visit its insurance rates by model tool. The page also contains details on how Insure.com collected the average rates listed above.
All the vehicle prices above refer to July 2015 manufacturer’s suggested retail pricing for a given model’s indicated trim line, excluding options, rebates and destination fees. Rankings omitted some similar trim lines of the given model, and not all photos shown are of the exact trim level mentioned.