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Stop Buying Insurance Until You Read
This
(PRWEB) May 30, 2005 -- Uninformed Americans overbuy nearly
every type of insurance from overzealous agents who put
commissions ahead of clients or insurance companies that
deluge them with marketing messages.
Being over-insured places needless financial burden on
young families, baby boomers and retirees, says Paul J.
Mauro, CLU, CHFC, Managing Partner, Legacy Financial Advisors,
Inc. in Milford, MA. Mauro’s firm delivers a complete
menu of financial and estate planning services. He says,
"Integrate insurance with financial and estate planning
to avoid the common and costly insurance mistakes consumers
make."
Here are some of Mauro’s favorites:
Too many property insurance companies--Consolidate homeowner
and auto insurance with an umbrella insurance policy.
Bundling policies can cut premiums by 15%. If you buy
a $1 million liability umbrella insurance plan, do not
increase the underlying limits on the home and car above
$300,000. This is wasteful.
Buying whole or universal life when young--Young breadwinners
with dependents, a big mortgage and more responsibilities
than money, should never buy a small permanent, whole-life,
universal life or any life insurance with an investment
component. This leaves young families grossly underinsured
because they cannot afford enough coverage. A 35-year-old
father of three with a $50,000 annual income needs a $1
million policy. Level term is $400. A $1 million universal
life policy, has cash value, but the same coverage costs
about $6,000, hence young families often buy too little
death benefits.
Not buying insurnce at work--Employers can help you lower
insurance cost by sponsoring many types of insurance.
For example, buying voluntary excess disability insrance
as part of a group at work usually costs a third the price
of an individual policy. Other employer-sponsored plans
offer good value as well.
Procrastinating on buying long-term care insurance--Look
into employer-sponsored, long-term care coverage too.
Read the fine print. Make sure you can take this coverage
with you if you leave the company. Don’t delay. Long-term
care insuranc at age 70 costs $4,000 annually, totaling
$60,000 to age 85. The same policy, through an employer
group, bought at age 50 costs $1,200 per year or $42,000
to age 85; saving $18,000.
Not evaluating your insurance at age 60--Re-evaluate
coverage. Since most disability insurnce covers you only
until age 65, it may be wise to drop it as you near retirement.
A disability policy at age 40, could pay you for 25 years
at $40,000 per year or $1 million total. If you are over
63, the policy will only pay out for less than two years
-- a total of $80,000 in benefits.
Paying for accident insurance--Get rid of "accidental
death only " benefit policies. As you age, death
or injury by accident, as opposed to illness, becomes
increasingly less likely. "I met a couple with $250,000
of accident-only life insruance on each other. They were
70 and did not snowmobile, horseback ride or skydive."
Not comparison shopping for Medicare Supplemental Coverage--Buy
high-quality medical and Medicare supplemental insurnace
coverage through whatever group arrangement you can find.
"A 72-year-old Massachusetts couple was paying $12,000
annually for an individual supplemental policy,"
says Mauro, adding, "They then joined an HMO and
cut their cost to $6,000." To find a group, contact
your former employer.
Failing to consult with an attorney--"Review your
business plans, estate plans, and medical documents with
your lawyer. In a recent case, a family was paying thousands
for insurance to cover the death tax for their children.
Likewise, living trusts for both spouses can cut the cost
of long-term care insurance in half," Mauro says.
Falling prey to insurance gimmicks--Some insurance is
just a bad buy. Individual dental insurance tops the list.
Illness-specific coverage is a close second. Collision
insurance on cars over seven-years old is dubious. Also,
drop most maintenance contracts, lost credit card insurance
and creditor insurance. If you bought mortgage insurance
(PMI ) when you purchased your home, the equity build-up
may allow you to drop it. Also make sure your creidit
card covers the rental car deductible and don’t buy
extra coverage.
Do not assume you know everything. New insurance policies
have been developed that are big improvements over those
available 10 years ago. Find a quality independent agent
or planner to help you review your old policies.
Example, "A Legacy client wanted their granddaughter
to inherit their $1 million dollar estate. She was the
apple of their eye and they were living on $25,000 annually
to conserve principal. I asked them if they thought their
granddaughter wanted the house and bonds, or a check for
$1 million tax-free from an insurance company. All grandpa
said was, ‘She’ll want the check.’
"Our client then bought a new joint-life insurance
policy with low premiums to endow the granddaughter. This
freed up cash from the estate and, as a result, we increased
their income to $45,000 annually, while guaranteeing the
granddaughter’s inheritance," says Mauro. Joint
life policies allow elders to spend some principal to
live better while leaving a tax free estate.
Legacy Financial Advisors Inc. (www.lfsadvisors.com) has
extensive experience in helping families plan for the
issues of aging and was featured in the PBS special "And
Thou Shalt Honor" broadcast in November 2004 on WGBH-TV.
With 30 years of experience in the area of planning for
aging, Legacy has extensively used new products and plans
developed which are referred to as "Principal Protected
Investing" recommended in the Ernst and Young LLP
in a white paper on the changing face of the industry
recently. Legacy Financial Advisors, Inc. has six offices
in Massachusetts; Milford, Duxbury, Yarmouth Port, Natick,
Peabody, and Braintree and offices along the East Coast.
Cut insurance costs without cutting needed protection.
Financial planning authority Paul Mauro, CLU, CHFC, advises,
"Too many consumers waste too much money on the wrong
kinds of insurance. The solution? Integrate insuracne
with finanical planning and ignore overzealous agents
and incessant insurance ads and promotions." Uninformed
Americans overspend on auto, homeowner, life, accident
and dental nsurance. The first stop for good isurance
value -- your employer.
Contact:
Legacy Financial Advisors, Inc.
321 Fortune Blvd.
Milford, MA 01757
800-427-9781
www.lfsadvisors.com
http://www.123lpn.com/pmauro/
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