Insurance Quotes & Advice

The facts are that flood damage can happen no matter what state you live in.  Even in the highest risk areas, only a small percentage of homeowners purchase flood coverage.  Many Americans have left themselves wide open to heavy losses with little to no recourse.

It’s estimated that about 30% of Americans still mistakenly believe that flooding is covered under their regular homeowner’s policy.  Heavy rains in the Midwest have brought flood insurance back into the spotlight.

Since insurance companies don’t typically offer this kind of coverage the government has had to step in and become the “insurer of last resort”.  In 1968, Congress established the National Flood Insurance Program(NFIP) which is under the direction of the Federal Emergency Management Agency(FEMA).

The program offers flood coverage to residents in communities that follow FEMA guidelines for floodplain management and damage mitigation.  Annual premiums are normally in the $400-$500 range for a median priced home.  While regular insurance carriers don’t offer the coverage itself many of them have entered into agreements with the program to accept payments for the flood coverage and maybe able to offer you some advice.

The program is often criticized because it encourages people to build and reside in flood prone areas.  Nonetheless if you live in these areas currently, you should take advantage of it.

Since it’s a federal run program, premiums are artificially low.  If private companies were to offer flood insurance, rates would be much higher.

As you grow older, the cost of insurance, especially for life and health can grow increasingly burdensome once you pass the age of 50.  Life insurance can be planned for more easily than for health insurance but even it can have it’s own problems.

For those that choose the term life option when they are younger as opposed to whole life, when your initial policy expires, the cost to renew can be prohibitive.  It may make more sense to switch to whole life at this point rather than taking out another term life policy.  One would also expect to be more financially secure the older you get so that you may not need as high a principal value for your policy.

Health insurance can be a large problem for Americans between the ages 50 and 65 years before you become eligible for Medicare.  Companies are also now able to reduce or eliminate some healthcare benefits for employees once they become eligible for Medicare so even after age 65 it’s no walk in the park.

After you pass the age of 50 and you are between jobs, it is imperative that you make the full use of your Cobra options because once you go 63 days without renewing your policy, insurance companies can legally turn you down or refuse to cover your pre-existing conditions.

Make sure also to use any tax related benefits that are open to you.  It may make more sense to switch to a high deductible policy and fund a Health Savings Account which can save you up to 30% for what you put into it.  You are also able to deduct all medical costs that exceed 7.5% of your annual gross income.

The fact of the matter is, you will more than likely have to make some sort of sacrifice in order to keep costs down.

The insurance industry is faced with the outlook of declining investment income for the foreseeable future with the economy in it’s current state. The industry’s losses due to the collapse of the subprime mortgage market is expected to eventually surpass the claims paid out for Hurricane Katrina.

What most people don’t realize is that a large percentage of the industry’s profits are derived from investment income rather than insurance premiums. For the most part, insurance companies tend to price policies to closely match what they expect to pay out in claims. They usually do this in an attempt to gain market share.

Now, it doesn’t take a genius to figure out that companies aren’t around to just break even. Most companies will have a target rate for Return On Equity(ROE) that they wish to achieve. But with investment income declining something has to give.

Even in relatively good times for the industry, they are usually involved in a number of disputes with state regulators over insurance rates. I’d say you can expect some bitter fighting later this year when companies submit their next annual rate proposals.

Many states make it illegal for companies to raise rates to make up for a previous year’s investment losses. However, companies do submit estimates on their projected investment income when they file rate proposals. With those projections expected to fall, there will be a growing pressure for insurance companies to raise rates to compensate.