Insurance

Long Term Care Insurance

Long term care insurance is something that many people could benefit from and it is definitely worth looking into.  If you ever need long term care, it is a monstrous expense. It is an expense so large that in fact, many big name insurance companies have actually stopped providing it.  Two out of ten adults will need long term care in a nursing home or other type of facility at some point in their lives and this on average costs between $6,000 and $10,000 PER MONTH!!

Because this expense is so huge, the government will force you to liquidate any and all assets you have before they will step in with any assistance.  So any money in the bank, house, car or item of value, will have to go before Medicare or Medicaid will help to cover. How sad would it be to work your entire life, then get sick and all that you have worked for go to pay for long term care?  Nothing left behind to your heirs. I definitely do not want my money spent that way if I can avoid it.

Jenn and I decided when we build our new house, to add in a “mother-in-law” type suite so that in the case that one of our parents fell ill, we could provide for them to prevent them from going into a nursing home.  We even have large hallways that could accommodate a wheelchair if necessary.

If you think that this burden would be too much for your family to bear, you should look into long term care insurance.

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“I can promise that if you read and apply what has been written here then you will eliminate financial regret from your life.” – Joe Sangl

 

Long Term Disability Insurance

Most people know they need life insurance, homeowners insurance and auto insurance.  While these types of insurance are very important, this does not mean that you are completely covered.  One of the other types of insurance that people forget is Long-Term Disability Insurance (LTD).

More than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the normal retirement age.  Read that again. Yes, 25% of people who are only 20 years old will experience some type of disability that will put them out of work for at least one year before they retire.  Long-Term Disability insurance is so important!

If I were to become disabled and lost the ability to speak, write, or perform the duties of my work, I would also lose my ability to produce an income by working.  However, that does not mean that life stops costing money. I would somehow need to generate an income which will continue paying for ongoing expenses. LTD insurance helps me to transfer this risk.  If I were to become disabled, LTD insurance would pay for 50 to 60 percent of my income until I am able to go back to work.

I prefer same skill disability insurance.  If I were to lose my voice and was unable to fully recover my ability to speak and teach, I would not be able to do what I was created to do.  I want insurance that will pay if I am unable to do that kind of work, not stop paying just because I am able to walk around again. In the insurance world, they call my preferred LTD policy “Own Occupation” insurance.  The type I do not want is “Any Occupation.”

Long-Term Disability Insurance Tips:

  • Ensure you clearly understand the policy
  • Obtain this insurance – Do not allow a gap in coverage
  • Make certain you obtain “Own Occupation”
  • Ensure any LTD policy provided via your employer is portable – that it can be taken with you should you no longer be an employee of that company

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SPECIAL OFFER: This month only, get your own copy of Joe’s book, I Was Broke. Now I’m Not. for 25% off plus free shipping!  Get your copy HERE before July 31st!

“I can promise that if you read and apply what has been written here then you will eliminate financial regret from your life.” – Joe Sangl

 

Lower Your Home & Auto Insurance

When was the last time you obtained quotes for your home and auto insurance?  It is very, very important to carry both home and auto insurance. However, that does not mean that you should pay the highest dollar amount possible!  Here are some tips to lower some of these costs and add some extra green to your budget.

Homeowners Insurance Tips:

  • If you have auto insurance or some other insurance, ask for a “bundle” discount.
  • Consider increasing the deductible to reduce your premium costs.  If you are managing your money well and have built your emergency fund to at least three months of expenses (Rung #5), you may consider increasing your deductible.  This can result in a substantially lower insurance premium.
    • Example: If you increase your deductible from $500 to $1000 and the premium drops to $400 a year, this is probably a no-brainer.  The premium is the only cost guaranteed to happen, and an event requiring the use of the insurance is not. If you are able to make it fourteen months without a claim, you will come out ahead financially.  Even if a claim happens two years down the road, you will pay the $500 more in deductible, but you will have saved $800 in premiums (two years at $400 per year in reduced premiums due to increasing the deductible by $500).  
  • Shop around for the best rates every two years.
  • Obtain a minimum of three quotes – one of them being from an independent insurance agency.

Auto Insurance Tips:

  • Always have auto insurance.
  • Bundle with other types of insurance to get discounts.
  • Shop around for the best rates every two years.
  • Obtain at least three quotes – one of them from an independent insurance agency.
  • Obtain quotes with different deductibles.
  • Obey the traffic laws.
  • Be very cautious buying car insurance from family or friends without getting quotes from other places.  

Try out some (or all!) of these tips and save some money today!

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Want more tips like this one?  Subscribe to the Monday Money Tip Podcast HERE.

SPECIAL OFFER: This month only, get your own copy of Joe’s book, I Was Broke. Now I’m Not. for 25% off plus free shipping!  Get your copy HERE before July 31st!

“I can promise that if you read and apply what has been written here then you will eliminate financial regret from your life.” – Joe Sangl

 

Whole Life vs. Term Life Insurance

One of the most popular questions I get asked is, “What is the difference between whole life insurance and term insurance and which do you recommend?”.  Both types of insurance can and will protect your family in the event of your premature death but there are a couple of key differences.

Whole life insurance is permanent insurance.  As long as you are paying the premiums, the insurance will remain in force.  With this permanent policy comes a cash value aspect. A portion of your premium would go to pay for insurance and a portion would go to fund the cash value.  It is possible that at some point your cash value could grow to be big enough that you could stop paying premiums. In this case, the cash value would be used to fund premiums and your insurance would remain in force.  

Term life insurance is exactly what it sounds like.  It is insurance that will be in force for a specific term whether that be 10, 20 or even 30 years.  Once that time period is up, the insurance no longer exists. This insurance is cheap and easy to understand when you compare it to other insurance products on the market.  

I carry a term life insurance policy equal to ten times my annual income.  If you bring home $50,000 a year, this would mean you would require a $500,000 life insurance policy.  To get this type of policy in whole life coverage would be entirely too expensive to carry. Because whole life insurance policies guarantee to pay out until death, along with the accompanying cash value, they are much more expensive to maintain.  

I decided to buy term insurance and invest the difference.  Essentially, you would pay for term life insurance and invest the remainder of what that would cost you in whole life coverage.  For example, a 30 year term policy for a healthy, 30 year old is around $380 per year. The equivalent in whole life is $4,000 per year.  If you decided to buy term insurance and invest the difference of $3,620, it would equal $1,055,479 after 30 years! Under this approach, if you have made the commitment to become debt free, you could be self insured by the time your policy expires!  However, the key to this approach is that you actually have to invest the difference. Notice I did not say, get term life insurance and use the savings to go shopping or take a nice vacation.

Ultimately the choice between whole and term insurance is up to you.  But it is better to make an informed decision, instead of allowing insurance salesman to confuse you into buying a policy that you do not understand.  It is very possible to get the coverage you need without breaking the bank!

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Want more tips like this one?  Subscribe to the Monday Money Tip Podcast HERE.

SPECIAL OFFER: This month only, get your own copy of Joe’s book, I Was Broke. Now I’m Not. for 25% off plus free shipping!  Get your copy HERE before July 31st!

“I can promise that if you read and apply what has been written here then you will eliminate financial regret from your life.” – Joe Sangl

 

Do You Have Enough Insurance?

I do not like talking about death.  I do not know many people that I do.  But, I am not deaf to the fact that we are all going to die.  Every single one of us. At this point, we all know that life insurance is important and hopefully you have taken the appropriate steps to protect your family.  But, is it enough? Is your policy enough to cover your debts and provide a comfortable life for those you leave behind?

I carry an insurance policy equal to ten times my annual income.  With an income of $50,000 per year, this would mean a person should obtain a $500,000 policy.  If I pass away while my children are still in the household, I want my wife to be able to focus on raising them without having to worry about replacing my income.  

With that being said, I also carry no debts.  My home, vehicles, and school loans are paid off.  I do not need life insurance in order to repay these debts.  If you do have debts, you should consider these when deciding how much insurance you need.  

The total amount of insurance that you require to secure your family should not break the bank.  For a healthy 30 year old male who does not use tobacco products, a $500,000 policy would cost about $25 a month in term life insurance.  For a healthy 30 year old female, the same coverage would cost about $20 a month. That is really cheap for such great coverage.

My personal goal is to become self-insured.  If you are able to become debt-free and invest wisely, you will eventually have enough money that your need for life insurance will diminish greatly.  Think about it. Suppose you die, leaving behind no debts and more than $1,000,000. You have probably become self-insured.

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Want more tips like this one?  Subscribe to the Monday Money Tip Podcast HERE.

SPECIAL OFFER: This month only, get your own copy of Joe’s book, I Was Broke. Now I’m Not. for 25% off plus free shipping!  Get your copy HERE before July 31st!

“I can promise that if you read and apply what has been written here then you will eliminate financial regret from your life.” – Joe Sangl