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January 2010 |
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SUPER
INVESTING newsletter series |
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7 New Year's Resolutions for 2010-Part 4 of 7 Hello Rogue Investors, My resolutions:
Sedona Tax Lien Workshop February 6, 7 and 8, 2010. Special for 2010 - until January 31st only $997, including 3 months of Wealth Umbrella access. Wealth Umbrella is your source of access to professionals standing by ready to answer your insurance, tax, estate, small business, real estate, stocks and financial questions. I challenge you to find a 3-day tax lien, foreclosure and small business workshop with hands-on experience in the field that includes continued support for 90 days for only $997. Don’t miss out on the Red Rocks of Sedona, wine and cheese, networking and a spiritual awakening in a mystical place. For more details about the workshop, please visit http://www.rogueinvestor.com/Sedona_tax_deed_workshop.html. Call 913-381-4520 to reserve your spot at this special price. Resolution Number 4: I will review my insurance needs. I have never been a fan of the lottery, gambling or insurance. Why? I hate paying for something that is rigged. In the case of the lottery and gambling, at least you are playing a game. With insurance it is no game. It is a painful necessity. First, there is health insurance, which your employer may or may not provie. In the U.S., this can cut into your earnings significantly. For example, a family policy can cost about $1000 per month. Next, there’s auto insurance, homeowner’s policies, flood, earthquake, renter’s insurance, life insurance, disability, supplemental, maternity, business liability, and umbrella liability. This is just a short list of what is available. With all of these policies available, it is wise to understand what you need and how much protection is appropriate for the cost and your risk tolerance. I am certainly not suggesting that you get rid of insurance; rather, the point is to know what you need and get a good deal. If you can save money on insurance and still get the same coverage or the coverage that you need, then you have freed up extra cash flow and you didn’t even miss a lunch. IMPORTANT! Do not make any changes to your insurance coverage until you discuss it with an insurance agent, estate-planning attorney, your family and any beneficiaries. Here are a few ideas to help you save money. Idea 1. Look for Hidden Fees If you are like most monthly bill payers, your statements come in the mail. You view them and cringe at the amount. You then get online to your bill pay center or you write a check and move on. If you are lucky, you have it debited automatically. Life is so hectic you forget to take time to review your bill and notice the extra fees. Insurance companies tend to tack on extra fees as the years go on and these fees are rarely noticed, especially if you are paying monthly or through automatic debit. They may even send you separate notices. But after being inundated by change in policy notifications, you become numb and ignore the deluge of paperwork. Most homeowners have their insurance added to their monthly mortgage payment, so increases or additions are rarely noticed. As for automobile insurance, occasionally additional fees are added without your consent. Recently I noticed that our insurance company decided we needed identity theft protection. It was automatically added for the year to our homeowner’s policy for an extra $45. Not to say we don't need it, but perhaps I would like to be the deciding factor and I don’t recall asking my agent to add it to the policy. Idea 2: Increase Your Deductible If you use insurance as protection and you can afford to come up with, say, $1000 instead of $500 in the event of a loss, then you can reduce your monthly premiums and maintain the same coverage. The only difference is that you have to be prepared to pay the first $1000 of loss, rather than $500. Remember, you should be able to do that using your emergency fund. High-deductible policies are also available for health insurance if you are paying your own premiums. Again, you pay less but you are responsible for paying more before coverage kicks in. Idea 3: Maximize Your Discounts by Asking It also makes sense to ask about discounts that are available through your policies. For example, you are eligible for discounts if you have both home and auto with one agency, if you have smoke alarms or burglar alarms, if you have financial stability (90% of insurers now use credit history to evaluate if you are a risk), if you live in a gated community, or if you are claims-free (they really love that one!). Discounts for auto policies can be offered if you are a multi-policy holder, you have financial stability, you have good students, you are accident-free, or have multiple cars on your policy and the cars have air bags. If you have dependents that are under the age of 25 years, then discounts will apply for cars that are not sports cars (4-door and with a smaller engine). Other discounts for this age will sometimes apply if the dependent has taken a driver’s education or defensive driving course. You also get a discount for paying your policy premium up front, rather than monthly. Idea 4: Threaten to Take Your Insurance Elsewhere It is also a good idea to re-evaluate your insurance company every couple of years. We have been with ours for several years; however, we occasionally "threaten" changing companies and ask them to figure out ways to reduce our monthly premiums. Because we have many policies with them as well as few claims, they generally work with us. And to be honest, I like my agent and would rather not change. Changing insurance companies too often doesn't always look good to future insurance providers, so be careful. It's good to ask your agent questions regarding changes in premiums, as well as about commissions that they make for using certain carriers. You can get online quotes to compare with the policy you currently carry. Idea 5: Purchase Cheap Insurance In my opinion, two of the most affordable types of insurance from a consumer perspective are umbrella liability and term life policies. With an umbrella policy, you can purchase $1,000,000 in liability for about $250 per year. This coverage includes personal liability, additional automobile protection and recreational vehicle liability as well as watercraft liability. The policy attaches to your homeowner’s and auto policies and each umbrella policy can be modified to suit your needs. Be aware that your other policy terms may need to be increased. Life insurance policies vary and often include investment options. For our family, we chose to purchase term-life at a reasonable level that would comfortably cover our kids, but is not designed to make us poor during this lifetime. The amount of coverage is really a personal decision. In my mind life insurance is designed to help your loved ones or beneficiaries to financially recover from losing you. That may mean one or two years of your salary plus funeral expenses. It could mean paying off a mortgage and other debt and allowing for at least a year’s worth of salary. We pay premiums twice per year and we are covered until our kids are 25. We decided to do this to cover ourselves until our kids graduated from college and were able to support themselves. Everyone’s situation differs. Again, please consult with an expert. I am only suggesting ideas to help ease the pain of paying for something that is designed for protection and not an investment. If you can have the same level of protection, save money and use it for an emergency fund or investing, then you are the prudent investor.
All the best,
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SUPER
INVESTING newsletter series |