Tuesday, December 10, 2013

Online Quotes vs. Local Agent for Life Insurance

After you have done all the research as regards to the form of life insurance that suits you and the amount of coverage you need to carry, it is now time to shop for a life insurance cover.

When buying a life insurance policy in the US, you have two options:
  • Either buy life insurance online, or
  • Buy from a local insurance agent

Both options are practicable, and each has its share of pros and cons.

Let us compare the two options. To do this, we shall consider the pros and cons of each.

Pros of Purchasing Life Insurance online

1. Comparison of insurance rates is easy

With the internet, you can easily compare quotes from different insurers. Within minutes, you can have quotes from over 10 life insurance companies. After comparing the quotes, you can easily choose the best insurance provider.

2. Best rates

With online quotes, you are dealing with the insurer directly. You eliminate the expensive brokers that come between insurers and customers when dealing with local agents. Since agent fees are eliminated from the transaction, you get the best rates for your policy.

3. Free online quote (24/7)

With the internet, you can get a free online quote any time of the day. Although some local agents offer free life insurance quotes, they obviously do not offer a 24-hour service.

4. Fast quotes

Online quotes are such a time-saver. From wherever you are in the US, you can easily get a quote at the click of a button. Within minutes, you have your over 50 life insurance quote with you.

Assuming you are over 50 years old and wants to compare cheap life insurance over 50 in the US, the online quotes will be of great help.

5. Convenience

A major pro of an online quote is convenience. With local agents, you have to visit the agent physically to get a quote. With online quotes, you get the quote at the comfort of your living room or office.

6. Variety

With the internet, you get multiple policy quotes within minutes. The multiple quotes offer you a variety to choose from.

7. No pressure from sales people

Under the sales people pressure, most people end up making very poor decisions. With online quotes, you are not dealing with any sales person directly.

8. Efficiency in processing

With online insurance quotes, you fill out online forms that are clear-cut. In case of errors when filling the form, you instantly get a message showing the errors you have made. With local quotes, you do not easily detect errors.

9. Online proposal tracking

The problem of following up with agents and sales person to see at what stage your proposal is at, a common problem with local quotes, has been eliminated with online proposal tracking. You no longer have to call sales people; all you need is an internet-connected computer and you are good to go.

10. Substantial information

Information is power. With information available on reference websites and on the sites of online dealers, you can easily clarify the options that suits your life insurance needs.

Cons of Purchasing Life Insurance online

1. Susceptibility to internet cons

With the increase in popularity of the internet, we have seen an increase in internet scammers. The cons can trick you into contracts that don’t exist. You get involved with companies that do not exist.

2. Exposure of your credit card information

When getting online quotes you risk revealing your credit card information to scammers. With this information, the cons can drain your account within seconds.

3. Lack of personal touch

With online quotes, specific concerns and queries are not addressed. Most of the information available on the insurer’s website is general. This makes online quotes completely lose a personal touch.

4. One must be conversant with the internet

Although almost everyone in the US is computer-literate, not everyone is completely up to date with the internet. For the aged, getting an over 50 life insurance quote online becomes a challenge.

5. Little to no support

After entering into an insurance contract through online dealers, you receive little to no support. Most dealers aim at only getting the initial commission they receive from the policy provider. To be on the safe side, get the policy from the insurer’s official website.

Pros of Purchasing Life Insurance from a Local Agent

1. Personal touch

Although nagging, local sales person breathe life into life insurance. By talking to real people, you get convinced that you need that cover.

2. Working relationship

You develop a working relationship with the local agents. In case of any problem, you can comfortably consult them.

3. Personalized solutions

Specific requirements, queries, and concern are addressed in a more personalized manner.

4. Access to benefits and discounts

Most life insurance companies do not disclose discounts available in life insurance; they wait until you inquire. With local agents, you can easily ask for any discounts available.

5. Instant clarifications

In case of unclear issues in the policy, the local agent will offer you instant clarifications. You do not have to send emails and wait for days to get a reply (as it happens with some online dealers).

6. Customized package

Since you are dealing with the local agent face to face, you have a chance to bargain for a customized life insurance package.

Cons of Purchasing Life Insurance from a Local Agent

1. Inconveniences

Getting a quotation from a local agent is the most inconveniencing activity ever. You have to physically visit the agent (remember to do this within working hours). If you find other customers waiting, you will have to wait on the queue until your turn comes.

2. Appointments required

When dealing with local agents, you need to set an appointment. Unlike online quotes, you do not get a quote any minute you feel like getting one.

3. Limited variety

When purchasing life insurance locally, you do not have the time to walk from agent-to-agent comparing quotes. This is only possible with online quotes.

Imagine a 55-year old man who wants the best life insurance for over 50, will he be able to move from agent to agent (physically) to get quotes? I am sure he won’t, but he can easily do this online.

4. Limited freedom of comparison

When you do not have a variety from different dealers, you freedom of choice is interfered with.

With the above comparison between online insurance quotes and local agents, getting the best life insurance cover shouldn't be hectic.

Life Insurance Discounts Available

Like all other buyers, insurance buyers are always looking for ways to save on the cost of insurance. The buyers want to receive enough coverage at a relatively low cost. To facilitate this, insurance companies in the US have come up with different types of life insurance discounts. The discounts are aimed at enticing Americans (young and old) to take out life insurance at a saving.

NB: In the US, discounts are only available where state regulations and laws allow. Even where the law allows the insurance discounts, they are subject to eligibility requirements. The rates of discounts and eligibility requirements vary from state to state and from insurance company to another. Life insurance companies set their own rates of discounts and eligibility criteria.

The following are the common discounts in the life insurance industry:

1. Discounts For Non-Smokers

Tobacco smoking is known to have numerous health effects like mortality, cancer, pulmonary damage, cardiovascular implications, renal damage, and influenza among others.

In life insurance, health status is a very important factor. Your health conditions highly affect your mortality. Studies have shown that Tobacco smokers lose an average of 13 to 15 years of life.

Since non-smokers are at a lower risk of dying, life insurance companies give them a non-smokers discount as a token of appreciation.

In addition to the non-smokers discount, there is the competitive smokers’ discount. This is for the infrequent smokers.

2. Combined Cover Life Insurance Discount

Like with auto insurance, if you combine you over 50 life insurance policy with other policies offered by the same company, you are likely to receive some discount.

For instance, if you take out a term or whole life insurance policy and a life annuity from the same life assurance company, you are likely to get discounts from the company.

Combining policies offered by a life insurance company not only saves you time but also earns you discounts.

Again, this will depend on the insurance company’s policies and eligibility criteria.

3. Discounts On Fortnight Premium Payments

In most life insurance companies, you get a fortnight discount off the fortnightly premium. The main aim is to encourage people to switch to fortnight premium structures.

4. Discounts On Monthly Premium Payments

Although annual premium structures are the most common in over 50 life insurance, insurance companies encourage policyholders to take the monthly structures by offering a discount off the monthly premium.

5. Discounts For Annual Premium Payments

In some life assurance companies, you get a discount for paying your premiums annually. Usually, the discount is included when calculating the annual premium and reflected in the premium quotation.

6. Large Sum Insured Discount

Generally, the larger the sum insured in life insurance, the larger the discount you enjoy. This discount borrows from the quantity discount where consumers are offered discounts when they purchase in large quantities.

The amount of discount will vary from one insurer to another.

7. Family Discount

In most life insurance companies, if an immediate relative purchase a life insurance policy, both of you enjoy a discount. The discount is commonly referred to as family discount.

This discount applies to the premium payable.

For instance, if you and your other half each buy life insurance policies of a certain sum, you will enjoy a family discount in addition to other discounts such as the large sum insured discount.

The amount of discount and the eligibility criteria will vary from one insurer to another.

8. Veteran Discounts

Another life insurance discount you will find in the US is the veteran discount. Veteran discounts are benefits veterans are entitled to through special life insurance plans.

To benefit from the veteran discounts, you must verify your record of service. Remember, the discounts are specifically designed for veterans.

The above are only some of the life insurance discounts you will find in the US. Other discounts, unique to particular life insurance companies, exist.

Before buying a life insurance policy (especially life insurance for over 50), find out the discounts offered by different assurance companies. The discounts are the best way to save on insurance costs.

Some insurance companies do not disclose the available discounts until you ask. Always inquire the available discounts from the insurance broker or agent.

Tip: Always compare. Before buying an insurance policy, always compare the premiums charged and the life insurance discounts offered by different life insurance companies. With the internet, the comparison should not take up much of your valuable time. Within a few minutes, you can compare cheap life insurance over 50 options available in the US.

Term Vs Whole Life Insurance

Basically, life insurance is divided into two: term life (or temporary) insurance and whole life (or permanent) insurance.

With term life insurance, the insured makes premium payments for a specified period (20 or 30 years). If he or she dies within the specified term, the insurance company pays all the policy benefits to the dependents.

With whole life insurance, the policy remains in force until the policyholder’s death (provided he or she is paying premiums). In the event of the insured’s death, the beneficiaries receive all the policy benefits. In addition to the life cover, part of the money paid as premiums accumulates as cash value. You can use the cash value as collateral for loans or use it as a retirement saving plan.

To compare the two forms of life insurance policies exhaustively, let us look at the pros and cons of each.

Pros of Whole Life Insurance

1. Lifetime coverage at a set premium

As the name implies, a whole life insurance policy offers you protection for your whole life. The good thing is that premiums in this form of insurance are set /fixed.

With fixed premiums throughout your life, planning becomes easy. You are assured of the amount of premiums you are supposed to pay per year.

2. Cash values

Besides the life cover, the policy helps you build up a cash value. The amounts paid in excess of premiums are credited to a cash value account. With time, the cash value builds up and can be used by the insured during his/her lifetime. The cash value can also be used as collateral when taking out a loan or mortgage.

Even if you stop contributing premiums towards the policy, the accumulated cash value is yours to keep.

3. Guaranteed growth on cash value

The most attractive feature in whole life insurance is the cash value. The cash value grows every year; you are assured of this growth.

4. Loan provision

With whole life insurance, the policyholder has an option of borrowing from the accumulated cash value. The interests charged are relatively lower than those charged by banks are.

5. Death benefits

Regardless of when you die, the beneficiary in a whole life policy receives the face value of the policy. For instance, if you die a few years after you have taken out a life insurance for over 50, your dependents will get the face amount of the policy even though you had not contributed for long.

6. Tax benefits

Unlike other sources of income, proceeds from a whole life policy are paid out on a tax-free basis; your beneficiaries do not pay any form of taxes on the insurance income received.

7. Cash value is protected from creditors

In the event of lawsuits from your creditors, money in whole life policies can’t be touched. The creditors may sell all the assets you own but the cash value in policies is completely protected from them.

8. The policy pays a dividend

A major advantage of a whole life policy is that you, the policyholder, can enjoy the fruits of the accumulated cash value while you are alive. The insurer pays a dividend to policyholders in whole life policies. The amount of divided will vary with the amount of accumulated cash value and prevailing economic conditions.

If you took out your over 50 life insurance today, you will enjoy your dividends until death. You can enjoy the dividends for over 50 years depending on how long you live.

Cons of Whole Life Insurance

1. The insurance is expensive

Generally, premiums in a whole life policy are expensive. Compared to term insurance, the fees and commission in a whole life insurance are excessively high. Most policyholders do not recognize the fees since they are charged from their return on investments.

The high fees are what forces most young people to walk around under-insured or completely uninsured. However, insurance over 50s is common. Americans who are 50 years and beyond value life insurance than their younger counterparts do.

2. Inflexibility

Your financial status and that of your dependents change with time and thus the amount of your insurance needs. Unfortunately, whole life insurance cannot be amended accordingly. You stick with the coverage you bought on the onset.

3. Complexity

Compared to term life policies, whole life policies are more complex. With this complexity, only an insurance expert can tell a good deal from a bad one. In most cases, this complexity favors the insurer.

4. Outstanding loans reduce policy’s death benefits

Two main pros of whole life insurance are based on the ability to use the policy as collateral and ability to take out a loan from the accumulated cash value of the policy. In the event of death when there are outstanding loans attached to the policy, the policy death benefits reduce significantly.

Pros of Term Life Insurance

1. Low prices

Term insurance is arguably the cheapest form of life insurance. Provided you are in good health, you can get term insurance worth hundreds of thousands of dollars for as little as a dollar per day.

2. Guaranteed premiums

The premiums are fixed throughout the relevant insurance term. After the expiry of the term, the premiums may go up for continued coverage.

3. Flexibility

You can change your coverage accordingly as your insurance needs change. Additionally, this form of life insurance has an expiry date that allows you to reconsider your insurance needs before taking up another term.

4. Simple

Compared to whole life policy, this form of life insurance is very simple. Anyone can understand the policy.

5. No extra fees

A major disadvantage of whole life insurance is existence of other charges due to the investment feature of the policy. Since term life insurance is very simple, there are no other charges apart from the normal premiums.

Cons of Term Life Insurance

1. No cash value build up

In term life insurance, there is no cash value build up. A saving feature lacks in this form of life insurance.

2. Temporary

This is a temporary form of insurance; does not provide permanent protection. As you get older, term insurance becomes expensive. When you hit 50, consider whole life insurance for over 50.
The above comparison between term insurance and whole life insurance should be able to help you decide on the right form of cover to go for.

Over 50's Life Insurance Coverage Options In the US

Over 50's Life Insurance Coverage Options In the US. Life insurance (commonly referred to as life assurance in commonwealth nations) is an agreement between two parties (the insured and the insurer), where the insurer undertakes to pay a specified sum of money (benefits) to a designated beneficiary in the event of the policyholder’s death. Depending on the insurance agreement, other events like critical illness or terminal illness may trigger the payment of benefits. In an insurance contract, the policyholder pays regular premiums or a lump sum of money.

Generally, life insurance helps provide your family members a grip in the event of your death. Although one can take out a life insurance policy at any age, it becomes a necessity when you hit 50 years. At 50 and beyond, you have dependents who are likely to experience financial difficulties in the event of your death.

In the US, several life insurance coverage options for over 50s life exist. Let us look at some of the over 50 life insurance coverage options available.

1. Term Life Insurance Policies

Term life insurance (a form of temporary insurance) provides cover at fixed premiums for a limited period (the relevant term). After expiry of the relevant term, the policyholder has to either obtain further coverage with different conditions & payments or forgo coverage. In the event of the insured party’s death during the term, the beneficiary receives all the benefits.

A term life insurance policy is the least expensive mode to purchase life insurance for over 50. The coverage option comes with the following benefits:

  • Most insurance companies give you the possibility of converting to a permanent policy in future (regardless of health and age).
  • In most life assurance companies, you have a choice of 10-year, 20-year, or 30-year fixed-premium coverage options. This provides flexibility.
  • In case of your death, proceeds from a life insurance policy can help make rent and mortgage payments, pay funeral expenses, pay outstanding loans, cover childcare and more.
  • The premiums are fixed throughout the relevant term. The fixed premiums let you plan appropriately.
  • Some life insurance companies will offer ways to customize your policy. You can customize a policy with add-ons popularly known as riders.

2. Whole Life Insurance Policies

Whole life insurance is a type of permanent life insurance that covers the insured’s whole life and in most cases requires annual premiums into the policy.

At the age of 50 and beyond, life insurance companies classify you as a high-risk client. It is at this age and beyond when age-related diseases start creeping in. For life insurance over 50, consider whole life insurance because it carries the following benefits:

  • In the process of the long-term protection, you build up cash value. It is a saving plan that benefits you while you are living or your beneficiaries in the event of your death.
  • The 10-year, 20-year, or 30-year coverage options offered by most life insurance companies make the coverage simple and flexible.
  • Although the premiums are paid annually, they are fixed throughout the life of the insured. The premiums never increase thus making planning an easy task. The premiums will never increase in spite of changes in age & health.
  • Life insurance policies are customizable. To enhance your policy, most life insurance companies will offer you several supplemental covers.
  • Some life insurance companies pay dividends to whole life policyholders. The dividends increase the policy value or increase death benefits for the beneficiary.
  • In whole life insurance, death benefits are guaranteed.
  • You get tax savings in terms of deferred tax.

3. Universal Life Insurance Policies

Universal life insurance is a type of permanent life insurance common in the US. Under the policy, excess premium payments are credited to the cash value of the policy. The excess cash is credited to the cash value with interest every month, while a cost of insurance charge and other insurance charges and fees debit the policy.

Although there is a minimum contractual interest, the interest credited to the cash value is determined by the insurance company.

A Universal life insurance policy becomes great life insurance for over 50 owing to the following benefits: 

  • The insurance policy features a long-term coverage option.
  • The policy guarantees a minimum interest rate, usually coming from the excess premium paid.
  • Flexibility – You have an option to change the premiums and thus the coverage amount. To increase the policy’s value, you can increase the premiums.
  • The policy can be supplemented with other policies (riders) to enhance it.

4. Variable Universal Life Insurance

Variable universal life insurance (VUL) is a form of permanent life assurance that gives you a balance between the potential of building up cash value and permanent protection. The policy has an underlying investment option.

Universal life insurance is a great over 50 life insurance for those who want to take a proactive approach to life insurance. You cover your life and build up cash in the process. The policy has a death benefit and an investment feature.

The variable component in the policy indicates that money is invested in separate accounts (like mutual funds) with varying values. The universal component in the policy indicates the flexibility the policyholder has in making premium payments.

When does variable life insurance come in handy? 

  • When you want to accumulate cash, either for your own use or for your beneficiaries
  • When you want to invest but cannot tolerate the volatility of returns in the investment markets.
  • When you want to take coverage for a relatively long period
  • When you are able to pay premiums over an extended period

5. Survivorship Life Insurance

In survivorship life insurance (or second-to-die insurance), two people are covered and the benefits accrue only when the second person passes away. This type of insurance policy is an important part of an estate plan.

The survivorship life insurance policy lets you do the following:

  • Where assets are indivisible or difficult to divide, the policy helps equalize your estate among the beneficiaries.
  • With the policy, you are able to provide funding for your child and other dependents past your lifetime.
  • Survivorship policy ensures that funds are available for fees, real estate expenses, and taxes.
Choose the over 50's life insurance cover that fits you today.

Friday, December 6, 2013

Auto Insurance online vs. Local Agents

When shopping for auto insurance, you have two options – buy auto insurance online or visit your local insurance agent in person. Each of the options has its own pros and cons.

Let us compare the two options.

1. Online purchase of auto insurance policy

This is whereby you buy an insurance policy online from an internet-based company. You do this by visiting your insurance of choice’s URL. If you do not have an insurance company in mind, you can conduct a search on Google. On the search results, click on one or more of the links. It is advisable that you visit more than one website for comparison purposes. Comparison might not be necessary if you have an insurance company in mind. Once you are on the auto insurance company website, review all the requirements and fill an online form that amounts to an insurance contract.
NB: Remember to carefully read all the company’s terms and conditions.

Advantages of buying auto insurance online

a) Comparison of rates is easy

With the internet, you are able to compare auto insurance premiums of hundreds of insurance companies within a very short time – in fact, you can do this in less than one hour. This is not practical when you decide to purchase a policy locally.

b) Custom coverage fast

With online insurance companies, you are able to get a custom coverage fast and conveniently. To make it quicker, you need to have all your car details ready ahead of time. You easily choose the policy that perfectly fits you.

c) Absolute best rate

Since comparison is easier in online purchases, you to get the absolute best rates in the market. You conduct your own research; you do not rely on the usually biased insurance sales representatives.

d) No pressure

Another benefit of purchasing automotive cover online is there are no sales persons trying to persuade you. Sales persons can be so persuasive making buy a policy you do not require. When purchasing online, you make your own independent buying decisions based on merit. You do not face any kind of pressure from sales representatives.

e) Time-saving

You save time when you purchase a car insurance policy online. Within minutes, the online application form is filled and submitted. In less than 24 hours, you receive a reply from a live agent. You also save on time that would have been used to visit the local agent.

f) You can get a quote before you purchase a car

With online auto insurance companies, you can easily compare the different auto insurance quotes for different cars. This helps you make an informed decision on which car is more economical in terms of insurance costs. It is tedious to gather this information from local insurance agents.

g) Convenience

With the internet, you can purchase an insurance policy on the go – you purchase a policy anywhere anytime. For local companies, you have to visit the agent physically and you have to do this during working hours. With online insurance companies, you can purchase your auto policy from your laptop, Smartphone or even a tablet.

h) No Hassle

Sales persons can get into your nerves with their unending persuasions. Most people like buying goods and services when they have made a decision to do so. Online insurance companies let you buy a policy when you have made a concrete decision. Additionally, you get all the anonymity you require.

i) Variety

The internet is home to hundreds (if not thousands) of insurance companies. The huge number of insurance companies gives you a variety to choose from. When provided with a huge variety to choose from, you can never go wrong.

Disadvantages of purchasing auto insurance online

a) Susceptibility to scammers

Numerous hoaxers that offer low-cost auto insurance plans exist in the internet. Usually, the fraudsters offer very attractive rates – rates that are too good to be true. For this reason, you need to be very careful when purchasing insurance policies online. Only purchase from firms with verifiable authorities.

b) No contract

Online purchase of auto insurance does not involve signing of any contract. This means that there is no binding contract between you and the service provider. You pay your premiums online and get most of your queries answered online. Again, make sure you purchase insurance from a company that can be traced physically.

c) Leaving you on your own

Most online insurance companies leave you on your own after you have purchased the policy. Although they expect you to continue with the regular contribution of premiums, they provide you minimum or no support. This makes life hard for you especially if the website does not have all the information needed.

d) Exposure of personal information

Most online insurance companies require a lot of personal information about you just to get a quote. The personal information they require include, but not limited to, postal address, email address, social security number, personal income, and phone numbers. It is not safe to provide personal information online unless you truly trust the party you are giving the information to.

e) Time consuming

Sometimes, purchasing an auto insurance policy online can be time-consuming. It could take you over twenty minutes to go through some forms just to get a quote. Local agents give you a quote in less than 10 minutes.

2. Purchasing auto insurance policy from a local agent

This involves physically visiting an insurance company or their local agent and purchasing an auto insurance policy. It is an old-fashioned approach but still the best approach.

Advantages of purchasing auto insurance policy from a local agent

a) Dealing directly with an insurance agent has a personal touch that everybody likes. The personal touch leads to peace of mind and satisfaction. Peace of mind is very important in an insurance contract.

b) You are able to develop a working connection with the insurance agent. This helps you view the policy in a personal way rather than just a policy number.

c) The insurance agent can customize an insurance package based on your needs and requirements. You are able to explain your needs clearly to the insurance agent.

d) If there is anything unclear about the policy, your get answers instantly from the agent. This is unlike with online policies where you pose a question and wait for hours before you get a reply.

e) Although the insurance agent does not handle claims, she or he may make a call to the head office for updates concerning your claim.

f) In case of issues with the policy or claims, you call a person you know and trust. This is unlike with online policies where you chat with agents you are not familiar with.

g) You gain access to discounts and subtleties, which are not available when you purchase auto policies online.

Disadvantages of purchasing auto insurance policy from a local agent

a) Inconveniences

Local purchase of insurance policy is an inconvenient approach. You have to visit the agent’s premises physically and you have to visit during working hours.

b) Limited access to other quotes

Usually, there are a limited number of insurance agents in a given area. This limits your access to a variety of insurance quotes. Even if you decided to get quotes from the few agents available, it would be a tedious process.

c) Limited freedom of comparison

When you buy auto insurance online you get to easily compare auto insurance quotes from different insurance companies. This is not possible when you are purchasing a policy from local agent.

The Most Common Auto Insurance Payment Plans

What are the common auto insurance payment plans? Auto insurance is an undertaking by one party (the insurer) to compensate another party’s (the insured) losses or liabilities in the event of an auto accident. For any complete contract, there must be consideration. In an auto insurance contract, the consideration is premiums paid by the insured to the insurer. A premium is the amount of money charged by an insurance company for offering the insurance cover.

Depending on the insurance company, auto insurance premiums can be paid once per year or be paid at intervals during the year. A good number of auto insurance plans that one can choose from exist. Selecting the right payment plan is very important when selecting an insurance policy. Although most insurance companies allow policyholders to change payment plans anytime, it is usually advisable you make a concrete decision at the beginning of the policy. Changes to the payment plan could come with extra charges and penalties. Generally, the more installments per year a plan has, the most expensive the plan is. The following are the most common automotive insurance payment plans.

1. Annual auto insurance plan

Although rare, some companies are still offering annual auto insurance policies, where premiums fall due once per year. With the annual plan, your rates of premium are locked throughout the year.

Pros of annual auto insurance plans

  • Since premium payments in annual plans are infrequent, it allows for proper planning.
  • The rates are not affected by changing economical conditions.
  • After payment, you stay for a whole year without thinking about insurance payments.
  • The only factor that can lead to an increase in premiums within the year is a change in the insured car.

Cons of annual auto insurance plans

  • You are required to have a large sum of money when the annual payment falls due.
  • The rates do not drop even when the economical conditions become favorable during the year.
  • The purchase of a more valuable car will lead to an increment in premiums.

2. Semi-annual auto insurance plan

This is an insurance policy where you pay your premiums once in every six months. This amounts to two payments per year. After the six months, the insurance company reviews the premium, either upwards or downwards, depending on the prevailing economic conditions.

Pros of semi-annual insurance plans

  • Unlike the annual plan, the semi-annual auto plan lets you pay relatively smaller amounts of funds when the payment falls due.
  • Compared to quarterly and monthly plans, the premiums are relatively fixed. They do not change frequently thus allowing for proper planning.
  • In case of favorable economic conditions during the year, the premium rates could go down.
  • After paying the installment, you stay for a whole six months without thinking about insurance payments.

Cons of semi-annual insurance plans

  • In this plan, there is a frequent adjustment in premium rates than with the annual auto plan. This interferes with proper planning.
  • Unlike the quarterly and monthly plans, semi-annual plans require that you have a relatively large sum of money when the premium falls due.

3. Quarterly auto insurance plans

This requires the policyholder to pay premiums once in every three months. It is a worthwhile plan since it avoids certain fees available in semi-annual and annual plans. There is adjusting of premium rates in this plan in every 3 months.

Pros quarterly auto insurance plans


  • You could benefit from downward adjustments in the premium rates if the prevailing economic conditions are favorable.
  • Compared to the monthly plans, payments in quarterly plans are not frequent thus allowing for proper planning.
  • Compared to the annual and semi-annual plans, the amount required when a quarterly plan premium falls due is relatively small.
  • After paying the quarterly installment, you stay for three months without thinking about insurance. You have a three-month financial break.
  • Quarterly plans are relatively flexible. You can terminate the contract after the three months without facing penalties.

Cons quarterly auto insurance plans

  • Compared to annual and semi-annual plans, quarterly automobile insurance plans are more frequent thus interfering with budgeting and planning.
  • In case of unfavorable economic conditions within the three months, the auto insurance company will adjust the premium rates upwards.
  • Unlike the monthly plans, quarterly plans require that you have a relatively large amount of money when the payment falls due.

4. Monthly automotive insurance plans

In this plan, the premium falls due every month. Like all the other payment plans, late payments in monthly plans attract penalties. To avoid the penalties it is wise to set up an automatic billing system. An example of the billing systems is a standing order.

Monthly vehicle insurance plans enjoy benefits and face limitations similar to those of quarterly plans. The only difference is that the premium rates in monthly plans are adjusted on a monthly basis while those in quarterly plans are adjusted on a three-month basis.

The following is a list of state average monthly rate on auto insurance according to InsuranceQuotesUSA.com (2012):

Alabama: $56.50
Washington D.C.: $98.50
Kansas: $49.17
Alaska: $80.17
Florida: $88.58
Kentucky: $62.50
Arizona: $77.17
Georgia: $65.33
Louisiana: $89.67
Arkansas: $57.75
Hawaii: $70.25
Maine: $53.67
California: $70.42
Idaho: $48.58
Maryland: $78.75
Colorado: $68.92
Illinois: $61.92
Massachusetts: $92.75
Connecticut: $82.58
Indiana: $54.75
Michigan: $77.58
Delaware: $85.67
Iowa: $46.25
Minnesota: $65.92
Mississippi: $62.08
New York: $93.50
South Carolina: $62.75
Missouri: $57.08
North Carolina: $50.17
South Dakota: $47.08
Montana: $57.08
North Dakota: $46.17
Tennessee: $54.92
Nebraska: $51.75
Ohio: $55.75
Texas: $70.42
Nevada: $81.92
Oklahoma: $56.50
Utah: $58.83
New Hampshire: $66.00
Oregon: $61.42
Vermont: $58.25
New Jersey: $98.67
Pennsylvania: $70.75
Virginia: $58.17
New Mexico: $60.58
Rhode Island: $88.25
Washington: $70.00
West Virginia: $71.42
Wisconsin: $51.25
Wyoming: $53.25

5. Two Months Down with a 5 Pay Plan

This is a common policy type when purchasing a new auto insurance policy. Basically, you get a one-month grace period either at the beginning or end of the policy. Usually, the one month without a payment is because you made your first installment contribution at the policy start-up. Not all insurance companies offer this plan.

Minimum Coverage: How Much Auto Insurance Coverage Is Enough?

In the recent past, we have witnessed a good number of insurance companies and insurance agents touting the following “State minimum coverage for less money!” This leaves most people with the following questions

- What is minimum coverage?

- What is the minimum coverage in my state?

Minimum coverage is the minimum amount of insurance the law requires one to get for their vehicle. This minimum coverage usually relates to liability and medical coverage. The amount of minimum coverage varies from one state to another.

The main reason why states set minimum coverage is to protect the insured party from cases of underinsurance. The main aim is to ensure full coverage of the insured party in case of an automobile accident.

Unfortunately, the minimum coverage is not always enough in common crashes. Sometimes an insured party finds himself or herself not fully covered in case of a car accident even when they have met the minimum coverage requirements. For this reason, it is advisable to get a cover higher than the minimum requirement. This ensures that you are always fully covered.

The following is a list of common auto insurance coverage options and their minimum and maximum coverage requirements. You could get one or several types of coverage for your car depending on your needs. Before settling for any single coverage option, make sure it will comply with your state’s laws concerning minimum coverage.

1. Liability for bodily injury coverage

This covers you against liability arising from injuries to a third party caused by your car in an auto accident. The minimum coverage for this injury varies from one state to another. The minimum may be as low as $20,000 per accident or $10,000 per person. Most auto policies stop at a high of $ 500,000 per accident or $ 300,000 per person for liability coverage. Again, this varies from one state to another. You need to check what rates your state has set for minimum coverage.

The amount of auto liability coverage you get should be enough to protect your car in case of an accident. The amount varies highly with the value of your vehicle. To be on the safe side, you could combine a number of policies covering different perils.

2. Liability for property damage

This is liability arising from damage caused to a third party’s vehicles or other property in the event of an auto accident. Depending on extent of damage, the compensation required by a third party could be so high and this is where the insurance company comes to your aid. The minimum coverage requirement for liability for property damage varies from state to state. Although having a Personal Umbrella policy may get you covered for excess costs, your insurance company may require that you get more than the minimum coverage to qualify for the Personal Umbrella Policy.

In most states, the standard policy is a minimum of $5,000 per accident and a high of $10,000 and more per accident. This could vary from state to state.

3. Personal injury coverage (PIP)

This coverage is for injuries you (or any other persons covered) sustain in the event of an auto accident. The insurance covers reasonable and necessary medical bills incurred by the insured party in treatment in the event of an auto accident.

In most states, the minimum coverage for personal injury is $15,000 per accident or person and a high of $250,000 or more. For some injuries, it is up to a maximum of $250,000 regardless of the selected limit.

4. Collision coverage

This coverage covers damage sustained by your own car in the event of an auto accident. Since you are covering your own car, the amount will depend on the vehicle you are insuring. However, you need to consider how large a deductible to take. (An auto insurance deductible is the amount of money you are required to pay towards repairs of your car before the insurance comes in to cover the rest.) The amount of deductible highly influences the premiums you are required to pay – the higher the deductible, the lower the premium. Generally, deductibles are between $250 and $1,000. Collusion coverage importance ceases with aging of the car.

Although State law does not generally require collision insurance, it is a very important coverage. The coverage is very important when the car is new and valuable but less important when the vehicle is old and of a lesser value.

5. Comprehensive coverage

This insurance plan covers miscellaneous damage sustained on your car from other causes other than collision. It covers losses arising from floods, theft, vandalism, and fire.

The cover is usually sold together with collision coverage and the two are often referred to as Physical Damage Coverage.

The coverage is optional and therefore the states have not set a minimum coverage. Although optional, leasing companies require that you have a Physical Damage Coverage (Collision coverage + Comprehensive coverage) before they lease you a car.

6. Medical expenses coverage

In the event of an auto accident, the insurance company clears medical bills for the covered party and his or her passengers. In all the 50 states in the US, this coverage is optional. Therefore, you set your own minimum and maximum levels. The limit you set is the maximum paid for medical bills for each person in the vehicle.

7. Uninsured/ underinsured motorist coverage

The two are optional covers in the US. The uninsured motorist coverage protects you in cases of auto accident and the other driver (who is in fault) has no liability coverage. On the other hand, the underinsured motorist coverage protects you from drivers who have too little (insufficient) liability coverage. The insurance company covers the difference between the faulty driver’s coverage and your costs (up to the limits you set).

Although optional, some states come in to regulate the limits sets. In these states, the law sets the optional limits and required limits available.

How Much Over 50 Life Insurance Coverage Is Enough?

Over 50 Life Insurance Coverage. Gradually, people around the globe have started to appreciate the importance of life insurance. In the US, the question has changed from – is life insurance really necessary, to – how much life insurance coverage do I need carry? This is a clear indication that more and more US citizens are now taking out life insurance policies.

The main purpose of life insurance is to allow your loved ones, who rely on you for financial support, to continue with their normal financial after you have passed on. Although any person, who has dependents, can take out a life insurance policy, it becomes a necessity when you hit 50 years. Anyway, the question remains – how much life insurance coverage is enough?

To try to come up with answers to the above question, we shall look at the factors you need to consider before taking out an over 50 life insurance policy. The factors help you in evaluating your life insurance needs.

The following are some of the factors that influence the amount of life insurance coverage you need to carry:

1. The amount of outstanding debt you have:

When taking out your over 50 life insurance policy (assuming you are 50 years and above), make sure it covers your existing debts fully. You don’t want to leave your dependents paying off your loans, do you? The life insurance policy should fully cover all your mortgages, car loans, credit cards and other forms of debt plus their interest.

Failure to cover these debts in your life insurance policy will see your dependents forced to sell the property you left behind.

2. Income replacement:

One of the chief purposes of life insurance is income replacement. When taking out a life insurance policy, make sure that (in the event of your death) policy payout is able to provide the amount of income you were providing.

Take a closer look at your budget (assuming you maintain one) and ask yourself the following question – how much does it cost to maintain my family? The answer you get to this question will be a perfect guide towards determining the figure you’ll use as income replacement (in the calculation of life insurance coverage you need to carry).

For instance, if you are the household’s main source of income and you provide $50,000 per year, you need an insurance policy large enough to replace the income you are providing. When calculating the income replacement value, remember to factor in inflation.

The figure you get as the income replacement should be added to the total debts calculated in (1) above.

3. Any future commitments:

If you have any future obligations like paying your child’s fees or moving your spouse to the UK, estimate the costs of these commitments and add them to the coverage amount you want. Since these are future commitments, you can’t have exact figures; you need to come up with estimates (remember to factor in inflation when coming up with the estimates).

Although some financial advisers predict that the returns from insurance will grow at the same rate as the cost of living, and that there is no need to factor in inflation when calculating future commitments for insurance purposes, always stay safe by factoring in inflation.

4. Final expenses:

In the event of your death, your dependents need money to finance your funeral, burial and related expenses. If you were the sole income earner in the household, financing the final expenses becomes a challenge. Therefore, you need to consider final expenses when taking out life insurance for over 50.

5. Time factor:

Another most important factor people forget when determining the amount of life insurance they need to carry is – how many years you’ll need insurance. In term life insurance, the insurance term affects the premiums to be paid and thus the policy value. A longer period entails many small premiums while a shorter period entails few large premiums.

After you have considered the 5 factors above, do not go shopping for life insurance yet. There is one important thing you need to asses – your income level. Your current income level plays a very important part when determining the amount of life insurance you need to carry.

Always take out life insurance policies you will be able to finance. Taking out a policy you can’t afford will lead to premature termination. Most insurance companies have penalties for premature termination of an insurance contract. To avoid losses arising from these penalties, always evaluate your financial capabilities. The following factors should be able to help assess you financial capabilities before taking out life insurance:

1. Current income level:

Does your current income level allow you to take the coverage you consider enough? If it doesn’t take a different amount of coverage. You should always strike a balance between enough coverage and your current financial capabilities. Learn to live within your means.

2. Level of current expenses:

Although life insurance is important, day-to-day needs are more important. Don’t take out a huge insurance coverage at the expense of current needs. Try to strike a balance between your current expenses and enough coverage.

At 50 years and above, expenses have considerably reduced than when you are 30 or 40. For this reason, a 50+ person can comfortably take out enough life insurance for over 50.

3. Level of your current resources:

If you have enough resources in form of bank savings and assets, there wouldn’t be a need for too much insurance. The assets can be liquidated to support the dependents. Remember to include these assets in your will.

When considering the assets you have, make sure they are free of any debt/charge. If they are tied to any form of debt, take out insurance to cover the debt.

The 3 factors above are meant to help you assess your financial capabilities when determining the amount of over 50 life insurance coverage you need to carry. The main aim is to help you strike a balance between your income levels and enough life insurance coverage.
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