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Expensive gifts? Insure them properly

12/26/2018

 
​If Santa was especially generous this year, let’s get the right insurance for those gifts.
​The presents are opened. Hugs and smiles fill the room. And most of your presents don’t need more than a huge “thank you.” Maybe a kiss where appropriate.
​But some of these gifts need just a bit more.
So, let’s talk about what you should do right after Christmas.
​Understand your personal property coverage.
​Under your typical homeowners, renters, or condominium insurance in Napa, most of your new Christmas presents will be covered under the section in your policy that’s often called Coverage C.
​But there are three things to double-check in your policy after you received an expensive gift.
​First, is the face amount of coverage high enough to cover all of your possessions?
​Is the deductible appropriate? We often assume that everything is OK. Now is a good time to make sure.
Second, do you have Cash Value Coverage or Replacement Cost Coverage?
​Most insurance is written with Replacement Cost Coverage. But that’s not always the case.
A beautiful new gift starts depreciating right away. In a year, it may not be worth what it was originally worth. Replacement Cost Coverage makes sure that you get “new for old” if there is a claim. Double-check that your policy has this feature.
Finally, are there limits on certain types of property?
No one likes to read the fine print. But in almost all policies, there are certain items that have limited coverage; it’s important to know these limits and exclusions.
​Schedule extra coverage where necessary.
​Many policies limit coverage on expensive or fragile things. Here are just a few of those:
​
  • Jewelry
​
  • Furs
  • Firearms
  • Expensive electronics
​
  • Collectibles
​
  • Fine art
​There are often low dollar limits of coverage on these items. There can also be limits on how the loss was incurred.
​For instance, if your diamond ring was stolen, there is usually some coverage. But if it was lost (rings do slip off fingers!) there is often no coverage.
​Even if the loss is covered, there can be a disagreement between you and the insurance company about the actual value of certain items.
​The solution is simple.
You can usually “schedule” extra coverage for these high-value items. It’s sometimes referred to as adding a “floater” to your policy.
Scheduling coverage for special items is less expensive than most people realize. It improves your protection in several ways:
  • Scheduled items are usually exempt from a deductible.
​
  • Scheduled items often have an agreed-upon value ahead of time.
  • Scheduled items are usually covered for more than just theft or fire.
​My advice:
​First, have a relaxing holiday season. Take time to reflect on your blessings, especially family and friends.
​Then, take a few minutes and call your local agent to discuss your coverage. Make sure your new gifts are insured properly.
​If you don’t have a local agent, I’d be happy to answer any questions you have. Send me an email or call me. I’d be happy to answer your questions with no obligation.
Happy holidays, everyone, and thank you for following my column over the years.

Long-term care insurance: two policy choices

12/12/2018

 
​If you decide to shop for long-term care insurance, you’ll need to choose between types of policies.
In this final article of the series, I’ll help you better understand that choice
The stand-alone policy
A traditional approach to long-term care coverage is a stand-alone policy. This type of policy covers only long-term care. It’s not attached to any other policy.
​A stand-alone policy is a simple and straight-forward proposition. It also provides policy flexibility.
​You can choose your daily benefit, a length of months (or years) payable, and a “time-deductible” called an “elimination period.” These all can help you craft a solution within your budget.
​But as a reader reminded me a few weeks ago, these types of policies have recently seen premium increases... even on existing policies. That’s because of how these policies are structured. These traditional types of policies allow for rate increases after the policy is issued if overall claims experience show that a rate increase is necessary.
​However, the unique benefits may outweigh the risk of a rate increase. A stand-alone policy should still be considered when planning for future long-term care needs.
A long-term care ‘rider’
​In recent years, the insurance industry has developed a new way to cover long-term care needs. It’s accomplished by issuing a “rider” (or add-on) to a permanent life insurance policy.
​I’ll simplify this, so please refer to specific policy language before making a final decision.
​For an additional premium, you can add a feature to your life insurance that pays you cash when you become eligible for long-term care.
​There are two major advantages to this type of policy:
​The first advantage is that your premium won’t go up. That’s because when benefits begin, the rider pays out a set percentage (typically 2 percent) of the face amount of the life insurance policy each month.
​Here’s how that works:
​You purchase a $200,000 permanent life insurance policy with a long-term care rider. Later on, you require long-term care.
You are eligible to receive two percent of the face amount each month ($4,000) until the face amount is exhausted. The proceeds are deducted from the face amount of the policy.
​In short, your life insurance policy is paying out an accelerated death benefit.
The second advantage is that the entire face amount will eventually be paid out to you, as long as the policy is in force.
​So, if you never require long-term care, the policy will still pay the face-amount upon death, or it will “mature” and pay the face amount to you or your estate while you are alive.
​If you require care for only a short period of time, the amount paid out will be deducted from your death benefit; the remainder of the face amount is still available for your heirs.
If you require long-term care for an extended period of time, your estate is protected, and you will have money to make the best choices possible for your long-term care.
​Which policy is best?
​There is no simple answer to that question.
​Your financial goals, your budget, and your tolerance for risk will be part of that decision. A local agent can help you craft a unique solution that’s right for you.
If you don’t have a local agent, I’d be happy to answer any questions you have. I specialize in long-term care insurance. Send me an email or call me. I’d be happy to answer your questions with no obligation.
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    Bruce Sackrison

    Napa, California
    (707) 931-018

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