Insurance

How to Decide If Pet Insurance Is Worth the Cost

Emily Guy Birken — Wed, 22 Jan 2020 18:11:28 +0000

Last fall, our greyhound Tivo refused his breakfast on a Friday morning. He didn't eat or drink water all day, and we were worried. That night, we took him to the 24-hour emergency veterinarian and Tivo was diagnosed with a bacterial stomach bug and dehydration. We went home with antibiotics, a saline IV, and a $200 vet bill.

Thankfully, we could afford this bill for unexpected emergency care for Tivo. But if he were diagnosed with a chronic condition or needed a very costly intervention, we might find ourselves facing some heartbreaking financial decisions.

Pet insurance is often touted as a solution to these worries. With pet insurance covering some costs of veterinary care, you're never forced to choose between your beloved pet and your finances. However, does this kind of coverage make sense for most pet-owners?

Here's what you need to know about pet insurance so you can keep your fur babies bright-eyed and bushy-tailed for years to come.

Premium costs

As with human health insurance, pet insurance charges you a monthly premium for your pet's coverage. According to Value Penguin, the average monthly cost for canine pet insurance is $47.20, and the average for feline insurance is $29.54 for accident and illness coverage.

Of course, this doesn't tell the whole story of what to expect from premium costs. Many pet insurers increase premiums with the age of your pet. Which means the $47 per month you pay to keep your 4-year-old pup healthy could rise with his/her age, making the premiums harder to keep up with just as they're more likely to need age-related medical intervention. In addition, different breeds can have different premium prices, since there are some hereditary conditions that various breeds may be more prone to.

However, even with these potential issues, there are some methods to keep premiums manageable. For instance, some tried and true insurance reduction strategies work just as well for your pet's health insurance as they do for your own. These include increasing your deductible, reducing the percentage that the insurance reimburses, or limiting the annual payout rather than choosing unlimited coverage.

These strategies can keep your premiums affordable while still helping with big veterinary bills. But you need to be prepared to pay anything above and beyond the coverage limits you set up. (See also: 8 Ways to Lower Your Vet Bills)

Coverage

It's also important to note that pet insurance does not necessarily cover every kind of health cost for your pets. To start, unlike (some) human health insurance, most pet insurance will not cover preventive care and annual exams. So you will need to plan for these costs on top of your premiums.

Pet insurance policies generally come in two varieties: accident and illness policies, and accident-only policies. In general, accident-only policies do not raise their premiums as your pet ages, making this kind of insurance more affordable long-term. However, accident-only policies tend to be cheaper because your pet is less likely to get injured than fall ill. If you decide to invest in pet insurance, getting both accident and illness protection will likely offer you more protection.

That said, each insurer gets to decide which illnesses, conditions, and services it covers, and not all ailments are covered. Many insurers also do not cover the diagnostic exam for a particular illness, even if the treatments are covered. Make sure you pay attention to the details of what your potential insurer will cover before signing up for coverage.

As with many types of human health insurance, most pet insurance policies exclude preexisting conditions. Unfortunately, some insurers consider health problems to be "preexisting" if they crop up within a year of the purchase of your policy. Insuring your pet when they're young is the best way to avert the preexisting condition coverage gap.

Finally, pet insurance coverage is usually handled via reimbursement. That means you'll be on the hook to pay the vet bill at the time of service, and you'll submit your receipts to your insurer to receive reimbursement. (See also: 7 Things You Need to Know About Pet Insurance)

Should you buy pet insurance?

With all the caveats, coverage gaps, and reimbursement requirements, pet insurance is not necessarily a slam dunk for everyone. In fact, many consumer advocates recommend that pet owners put aside an amount equal to the annual premium into a savings account each year. This will give you the same peace of mind that you can cover any potential health care needs for your pet while also allowing you to keep the money if you never need to use it.

However, if you struggle with financial discipline, this strategy will leave you in a difficult situation if your furry friend needs an expensive procedure. Pet insurance can provide you with the protection your pet needs even if you struggle with money.

Show your love with an emergency fund

Whether or not you decide to purchase pet insurance, remember that you'll have to pay upfront for any veterinary procedures. With insurance, you will get reimbursed for covered care, but you will still need to have access to funds to pay for Mittens' kidney stone removal or Rex's arthritis care at the time of care.

This means that one of the best ways you can protect your furry friends and avoid heartbreaking financial choices is to have an emergency fund. With or without pet insurance, set some money aside for the unexpected so you can enjoy your four-legged family members for years to come. (See also: 7 Easy Ways to Build an Emergency Fund From $0)

Like this article? Pin it!

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Why You Should Buy Travel Insurance — Even if Your Credit Card Offers It For Free

Holly Johnson — Thu, 10 Oct 2019 08:00:07 +0000

Travel is never cheap, and that's especially true if you're flying to a destination far from home. For that reason and plenty of others, savvy consumers tend to pay for travel insurance before they even head to the airport.

With a travel insurance plan, you can buy coverage that will reimburse if you if your trip is canceled or delayed for a covered reason beyond your control. You can even purchase "cancel for any reason" policies that let you back out of your trip any time you want.

Other inclusions travel insurance policies offer include medical coverage, baggage delay coverage, lost luggage insurance, travel accident insurance, and more.

Many consumers lean on the free travel insurance their credit cards provide — and that can sometimes make sense. After all, premier travel credit cards offer most of the coverage you get with a travel insurance policy for free. And if you can get insurance for free, why pay for it?

The reality is, there are a ton of reasons to buy travel insurance even if you get some coverage with a credit card. Here are a few of the most important details to consider as you plan your next trip.

Pay for sufficient medical coverage

Even though travel credit cards are pretty good about offering perks like trip cancellation/interruption insurance and baggage delay coverage, they're notoriously bad when it comes to offering medical coverage. That's a real problem if you're traveling to a destination where your own health insurance coverage won't work, such as any trip abroad.

With travel insurance, however, you can buy a policy that offers a much higher limits for medical expenses. It wouldn't take long to rack up huge medical bills if you wind up in the hospital due to illness or broken bones during your trip, but you can protect yourself with adequate travel insurance coverage that includes coverage for medical bills. (See also: How Emergency Medical Coverage Could Save Your Vacation)

You need medical evacuation coverage

In addition to medical coverage, you'll want to make sure you have adequate coverage for medical evacuation. This type of coverage will kick in if you become injured or ill and require emergency transportation to get back home. This could mean emergency evacuation in a plane or helicopter with a full medical team, so it's easy to imagine just how much you'd be stuck paying if you didn't have this type of coverage.

Most credit cards don't offer emergency evacuation coverage and ones that do may not offer high enough limits to help you sleep well at night. If you're worried about the high cost of medical evacuation if you were to become sick or injured overseas, you'll want to buy travel insurance that includes this benefit.

Credit card coverage may not even apply

Also note that some credit card insurance coverage may not even be applicable to you. Primary auto rental coverage, which is a popular credit card benefit, is a great example of coverage that doesn't always work.

Many credit card auto insurance policies only cover certain types of cars for certain amounts of time. For example, some cards only offer insurance for rental periods of 31 days or less. And some credit card auto insurance policies also limit the number of countries you can use your coverage in, meaning it may not work at all depending on where you travel to. (See also: 7 Times Travel Insurance Is Worth It)

You may want higher coverage limits

A final reason to purchase travel insurance is the fact that you get to select your coverage limits. This is unlike credit card coverage since it gives you whatever limits your credit card issuer decides.

For example, some cards offer free baggage insurance that can cover you if your baggage is lost by a common carrier. However, this benefit sometimes includes limits on the cost per person, per trip for carry-on baggage and checked bags, which may not be enough if you have brand-name luggage that would cost a lot more than that to replace.

The same is true with trip cancellation/interruption insurance, which is one of the most important valuable travel benefits you can buy. Travel credit cards that offer this perk tend to limit it to $10,000 per person and $20,000 per trip, which may not be enough if you splurged for a luxurious trip of a lifetime.

The bottom line

There are times when it makes a lot of sense to rely on your credit card's insurance coverage, but you have to make sure you have the coverage you need with high enough limits to count. In many cases, credit card travel insurance just isn't enough.

If you're on the fence about whether you have the coverage you need to protect yourself, you may want to buy a travel insurance policy just in case.

Like this article? Pin it!

This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Do You Need Wedding Insurance?

Emily Guy Birken — Fri, 05 Jul 2019 08:00:06 +0000

My mother and father got married in Baltimore, Maryland on June 22, 1972. That was the very day that Hurricane Agnes — the costliest tropical storm to hit the United States in recorded history at the time — made landfall.

Mom and Dad woke up on the morning of their nuptials to the news that most of their guests were unable to attend the wedding due to the flooding in Baltimore. They tried to reduce the wasted food and drinks at their reception by inviting anyone and everyone able to brave the streets, including my grandmother's hairdresser and the neighbors of several guests.

Nobody expects a national emergency-inducing hurricane on their wedding day, least of all in Baltimore in June. Of course, insurance was created specifically to protect you from the unexpected. Wedding insurance may not have existed when my parents got married, but could it be a way for couples nowadays to protect themselves (and their deposits!) from an expensive wedding emergency?

Here's what you need to know about whether wedding insurance is the right way for you to make sure your wedding goes off without a hitch. (See also: 15 Surprising Insurance Policies You Might Need)

What is wedding insurance?

Wedding insurance, which is also billed as special event insurance, is an insurance policy that covers cancellation of a major event due to adverse weather or the death, illness, or serious injury of a key participant. In addition to the cancellation coverage, marrying couples can also purchase riders for their wedding insurance that cover things like military deployment, protection of bridal wear from damage or vendor bankruptcy, theft or damage to wedding gifts, and personal liability for injury or damage.

The ability to protect yourself financially in case of a wedding catastrophe may make wedding insurance sound like a slam dunk, but it's often unnecessary, according to Lindsay Rocamora, a wedding and event planner based in Wisconsin.

Instead, she recommends taking a hard look at the possible problems you might encounter on your big day.

What might happen on your wedding way?

While no one wants to think about how things could go wrong on their wedding day, Rocamora recommends that all couples think through the moving parts that could cause a problem.

The little disasters

The things most likely to go wrong are also things you can ask about before signing a contract.

Rocamora recommends asking questions like:

What happens if the photographer or DJ gets sick?
What is the backup plan if the caterer drops the cake?
Is the company insured?
What are the penalties if the company fails to deliver on the promised goods or services?
What happens if you need to cancel the contract?

Understanding the clauses in your contracts with vendors can help you understand what your options will be in case of a problem. Rocamora also points out that wedding insurance doesn't necessarily cover these kinds of problems.

Fire, flood, or act of God

Many couples assume that purchasing wedding insurance will take care of them in case of a major weather event or other forces outside of their control. Unfortunately, that's not necessarily the case.

While cancellation or postponement coverage on a wedding policy could pay out in the event of an extreme weather phenomenon, it's generally only honored in the case of a statewide emergency. A more localized weather emergency may just be considered bad luck for the happy couple.

Rocamora also warns that many vendors indemnify themselves in their contracts in case of bad weather or another type of emergency:

"Most venues and vendors have a Force Majeure clause that protects them in the event of an act of God," Rocamora reports. "I've heard of tornadoes destroying venues, or fires at bakeries. If there is a drought in Argentina, then flowers will become scarce or more expensive. But the Force Majeure gives couples no recourse if this happens."

Wedding insurance generally doesn't protect couples from such bad luck, especially if their vendors have a Force Majeure clause.

Vendor bankruptcy

In 2017, bridal retailer Alfred Angelo abruptly declared bankruptcy and immediately shuttered all of its stores worldwide, which meant customers showed up to pick up their dresses and accessories, only to find the doors locked.

This situation was heartburn-inducing for the brides who were simply out of luck, although Angelo's biggest competitor David's Bridal (which carried many of the same designs) offered affected customers big discounts to help them keep their wedding plans on track.

According to Rocamora, wedding insurance could potentially help with such a problem, which may also occur with small, local vendors. The Angelo bankruptcy was a huge problem in the wedding industry with ripples throughout the United States and globally, but local vendors can also find themselves on shaky financial ground.

Liability coverage

Having a number of drunk wedding guests all in one place can potentially lead to damage, destruction, injury, or half the family refusing to speak to the other half. This is where wedding insurance could be helpful in protecting yourself from liability.

"Certainly most of my terrible wedding stories begin with vodka," Rocamora states. "But Wisconsin at least has some very strict liquor laws for venues and parks." Even if you don't live in Wisconsin, most state laws will require your venue to carry the coverage necessary to protect you in case a drunken reveler causes injury or damage.

Of course, if you're getting married in your backyard, then your venue does not already have the necessary coverage. But an umbrella policy with your homeowners insurance will likely take care of your needs, and potentially for less than a wedding insurance policy.

Don't forget that you may be held liable for any guests who drive drunk after your wedding. That means you should be sure you have the full coverage you need. Consider offering shuttles to a hotel or providing places to sleep it off, since a guest driving drunk is more than just financially devastating.

Lost or destroyed gifts

Another big selling point for wedding insurance is protection from stolen, lost, or destroyed wedding gifts. However, if gifts are stolen or damaged while at your home or in your car, then your homeowners insurance or auto insurance policy may already cover the loss.

Similarly, your venue may have coverage that will take care of you in the event that your gifts are stolen. Ask your venue and check with your current insurance policies before spending money on a special event policy, since it may not be needed.

Protecting your wedding day

The best-laid plans of brides and grooms oft go awry, and anyone who has ever been to a wedding can attest to the impossibility of a major event coming together perfectly. But there's a difference between the funny story of the caterer delivering a bachelorette cake to the wedding, and a true wedding day disaster.

To protect your wedding day, Rocamora recommends doing your research, asking lots of questions before signing contracts, using reputable vendors, and checking your homeowners insurance coverage, rather than wedding insurance. (See also: How to Negotiate on Everything for Your Wedding)

Like this article? Pin it!

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Pick a Travel Insurance Policy

Holly Johnson — Wed, 24 Apr 2019 08:00:09 +0000

Travel insurance may make your vacation more expensive in the end, but it could also save you thousands of dollars. Not only can travel insurance reimburse you if your trip is interrupted or canceled for reasons outside your control, but it can cover pricey medical bills, pay for medical evacuation in the event of an emergency, replace lost luggage, and more.

But there are so many different types of travel insurance policies — and so many travel insurance providers — that finding the right policy isn't always easy. You have to choose a company you trust first and foremost, but you also need to find a policy that makes sense for your trip and your budget.

Sa El, CEO of Simply Insurance says it's important to make sure your travel insurance provider has a strong reputation, an easy claims process, and proof that they pay claims reliably.

"This might seem like the last thing you should look for," he said. "But there is nothing worse than attempting to file a claim and the insurance company is giving you the runaround."

What to look for in a policy

However, travel insurance policies aren't necessarily created equal. In addition to buying insurance from a reputable company, you need to pick a policy that includes the types of coverage you need for your specific trip. Here's what you need to know:

Make sure your policy includes trip cancellation/interruption insurance

Carol Mueller, Vice President of Strategic Marketing at Berkshire Hathaway Travel Protection, says that the most common travel insurance claim in the U.S. is trip cancellation or "reimbursement for your trip investment if you must cancel for a covered reason." This type of coverage comes into play when you have a trip booked and paid for but can't go due to health problems, civil unrest in your destination, or any other reasons your policy agrees to cover.

"It's important for travelers to purchase a policy with trip cancellation and interruption coverage if they want their trip deposits covered," she said. Without this type of coverage, you could lose any deposits you've made on your trip or any other amounts you paid upfront.

While many hotels let you cancel up to 24 hours before your stay without a penalty, remember this isn't the case with airlines at all. Plus, there may be other components of your trip paid upfront including cruises, train travel, park tickets, group tours, and more. Trip cancellation/interruption insurance can reimburse you for all qualified reasons when you are unable to travel. (See also: 7 Times Travel Insurance Is Worth It)

Pay extra for medical expense and medical evacuation coverage

Also, if traveling outside the U.S., Mueller says you should make sure your plan also includes coverage and adequate limits of emergency medical expenses and medical evacuation coverage. "A comprehensive plan like Berkshire Hathaway Travel Protection's ExactCare Extra will include those coverages and more," she said.

With this specific policy, you get up to $50,000 in qualifying medical expenses reimbursed and up to $500,000 in emergency evacuation and repatriation of remains coverage. That might sound like a lot, but imagine how much it might cost if you broke your legs while hiking in a foreign country and had to be evacuated by helicopter. Or, just think of how much it would cost to have a heart attack abroad and fly home overseas with around-the-clock medical care.

The bottom line: Paying extra for this type of coverage will be well worth it if you ever need it, and some policies include it already.

Some policies also offer fixed reimbursements

Mueller also notes that some policies have fixed benefits that pay out in a set amount any time a qualified event happens during your trip. With their ExactCare Extra plan, for example, you get a payout each time you miss a connection and get rerouted to your destination.

"While the airline is rebooking you on a later flight, ExactCare Extra automatically pays out $100 directly to you for simply enduring the glitch on your vacation," she said.

Benefits you may not need

While it's smart to pick a travel insurance policy that is as comprehensive as possible, Sa El said that you may not want to pay extra for optional benefits like Accidental Death Insurance or excessive amounts of coverage for your personal items.

"This is mainly because there are probably other policies such as your life insurance, renter's insurance, or home insurance plans that will cover you for those items," he said.

You may also want to explore any travel insurance benefits you receive from a travel credit card. Consumers with a travel card may already qualify for trip cancellation and interruption coverage, primary auto rental coverage, baggage delay insurance, trip delay insurance, lost luggage reimbursement, travel and emergency assistance, and travel accident insurance, among other perks.

Keep in mind though that rewards credit cards offering travel insurance tend to be extremely light on medical coverage — if they offer any at all. Because medical bills can get out of control in a hurry, that can be a problem. (See also: When Is Your Credit Card's Travel Insurance Good Enough?)

The bottom line

Before you take your next trip anywhere — especially far from home — make sure you have a travel insurance policy in place. You may believe you can't afford to pay extra for this coverage, but the reality is, you may not be able to afford not to.

Losing thousands of dollars in trip deposits or flights is bad enough, but racking up hundreds of thousands of dollars in medical bills and emergency evacuation expenses could ruin your finances for years to come. With an affordable travel insurance policy in place, you can stop worrying about the "what ifs" and enjoy your trip.

Like this article? Pin it!

This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Times You Should Insure Your Side Gig

Kat Tretina — Mon, 02 Jul 2018 08:30:11 +0000

About two years ago, I launched a small side hustle dog-sitting for neighbors. It was a profitable side gig that allowed me to earn extra cash in my spare time. But one of the things I hadn't prepared for when budgeting my startup costs was insurance for my business.

I quickly found out it was necessary. My good friend who had encouraged me to take up pet-sitting was watching a dog for a client. She must not have closed the dog's crate all the way, because he escaped one night and destroyed the owner's expensive silk Oriental rug. The owners took her to court, and she ended up owing them over $30,000. Because she didn't have insurance, she was on the hook for the replacement cost herself.

Unfortunately, my friend's story isn't that uncommon. Many side hustlers run businesses without insurance, leaving them at risk if there's ever an accident or error.

Whether you're a freelance graphic designer, dog-sitter, baker, ride-share driver, or housekeeper, insurance can be an essential safeguard for your business. You might think insurance is unnecessary because your gig is too small, or perhaps you work solely from home. However, mistakes and accidents happen all the time in all industries. Here are five times you need an insurance policy.

1. You have customers visit your place of business

If you have customers visit your home or store — maybe you opened a hair salon, or you run child care services out of your house — there's a chance your customer could get injured on the premises. The client could sue you for damages, leaving you on the hook for tens of thousands of dollars (if not millions!). An insurance policy can protect you from this liability.

2. You spend time in a customer's home

Maybe you're a personal assistant or you run a housekeeping business, and your client trusts you to work in their home. Even if you're careful, it's all too easy to knock over a precious heirloom or spill a drink on a designer sofa. Without insurance to cover your mistake, you might have to compensate the owner for the damage on your own.

3. You work with children or animals

Children and animals present unique challenges, because they can be unpredictable and have a knack for getting into mischief. Whether it's an incident while baby-sitting a child or dog-walking, you could be held responsible for legal or medical fees. It's important that you insure yourself to cover these bases.

4. You're trusted with sensitive or proprietary information

If you're a graphic designer, bookkeeper, or writer, you might not think you need insurance. However, your clients likely entrust you with company information that is sensitive or confidential. If your computer is stolen or you're hacked, that information could be compromised, and your clients could take legal action against you.

5. You couldn't cover the cost of legal fees and settlements

As a business owner or side hustler, there's always a chance of a vendor or client suing you for some discrepancy or issue. If you don't have enough money in the bank to cover typical legal fees or settlement costs, you likely need insurance coverage. (See also: 9 Times to Hire a Lawyer Immediately)

6. You're driving people around

Uber and Lyft offer their independent contractors supplemental insurance in addition to requiring them to have their own auto insurance policies. However, don't think that means you're completely in the clear. Often, the company-supplied insurance has strict limitations and is inadequate.

For example, if you're a driver with Uber, you have third-party liability coverage of at least $1,000,000, uninsured or underinsured motorist bodily injury coverage of at least $1,000,000, and contingent collision and comprehensive coverage with a $1,000 deductible only when you're on your way to pick up a rider and until you drop them off.

If you have the app on and are waiting for a request, your coverage becomes much more limited: $50,000 per person or $100,000 per accident for bodily injury, and $25,000 per accident for property damage (such as a damaged fence). If you wreck your car, or if you damage another vehicle, you'll likely have to handle the repairs on your own. Because you were working for a ride-sharing app at the time of the accident, your personal auto insurance policy may not cover it, either. (See also: What Kind of Auto Insurance Do Uber Drivers Need?)

The lesson here is that even if the side gig company offers some sort of supplemental insurance coverage, it's probably not comprehensive enough to cover all of your bases. It's a good idea to look for your own supplemental policy to ensure you're fully covered.

Where to find insurance

In many industries, you can get an insurance policy for under $500 per year. If you're not sure where to start, contact your personal insurance agent to see if they offer business policies. If not, you can also use InsuraMatch to find out what insurance you need and get quotes for the necessary policies.

Like this article? Pin it!

This article is from Kat Tretina of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Should You Get Life Insurance for Your Kids?

Emily Guy Birken — Thu, 21 Jun 2018 09:00:27 +0000

My father was a financial planner, and he got his start by selling insurance. That meant Dad had some very strong opinions about insurance in general, and life insurance in particular. He was not shy about sharing those opinions with a captive audience — aka, his daughter.

Even though I heard Dad opine (and rant!) on any number of finance-related subjects, the viewpoint that stuck with me most was Dad's stance on life insurance for children.

"There is no reason whatsoever to ever buy such a product," he told me on more than one occasion. "Life insurance is for income replacement. Policies for children are morbid."

While part of Dad's objection to life insurance for kids stemmed from the exploitative practices you can find among disreputable insurance salespeople, he was also quick to admit that his own superstitions about tempting your children's fate added to his distaste for the products.

Though dear old Dad was right more often than not, I have come to see much more value in children's life insurance than he did. Here are some compelling things to consider before purchasing life insurance for your child. (See also: Term vs Whole Life Insurance: Here's How to Choose)

Funeral expenses

The average funeral in America costs about $10,000. Financial experts (including my father) might say that parents needing to pay such expenses for a child should use their savings to do so. But considering the fact that half of all Americans couldn't come up with $400 in an emergency, the expert opinion may not match most people's financial reality.

My dad did have an answer to this objection, however. There are many funeral homes that will offer their services free of charge for families who cannot afford the burial costs of losing a child.

That means parents who are considering life insurance for their children just because of the potential cost of final expenses might not actually need a policy. Not only is it unlikely that you will ever need the insurance payout, since it's relatively rare for children to die, but you will likely be able to find financial help or free-of-cost services if the worst should happen.

Income replacement

Dad made it clear that he believed life insurance was for income replacement only. So unless you're raising a child star, there is no reason to purchase a policy for your kid. (And you didn't want to get Dad started on parents who pushed their kids into show business.)

However, Dad's view didn't consider whose income will need to be replaced after the death of a child. The majority of children do not have an income, of course — but it's important to remember the very real cost of grief. Heartbroken parents may find themselves paralyzed by their grief and unable to work.

Having a financial cushion can help keep a family afloat during a terrible time when work may be the last thing on anyone's mind. If you absolutely have to bring in every cent of your paycheck to manage your family's finances, a life insurance policy for your kids could potentially protect you all from the devastating costs of grief.

Coverage protection

Something that never came up in Dad's comments about children's life insurance was the importance of future insurability. While a child's life insurance policy is generally much smaller than those purchased by adults, they will often include a rider known as the guaranteed additional purchase (GAP) that a child can rely on once he or she reaches adulthood. This GAP rider will allow the child to purchase additional coverage as an adult without medical questions or underwriting.

I have seen firsthand just how important such coverage protection can be. My best friend's son was diagnosed with autism at 15 months of age. My friend had not purchased a life insurance policy for her baby, even though she had intended to do so.

Unfortunately, this means her son is now permanently ineligible for life insurance because of his autism diagnosis. Once he reaches adulthood, he will not be able to purchase a policy for himself. And autism is only one of several juvenile medical diagnoses — including diabetes, severe asthma, cancer, or a heart condition — that can render a child ineligible for life insurance in the future.

This is why my friend now recommends that every parent buy life insurance for their children when they are still babies. At the very least, it will allow the child to have coverage throughout his or her life, no matter what medical surprises may be in store.

Don't fall for the "investment" promises

Many children's life insurance policies provide an option to cash out the policy once the child reaches adulthood. There is nothing wrong with this — unless you are worried your kids will cash out the policy and go on a shopping binge — but it is hardly the "investment" that it is often touted to be. (In fact, you could make Dad go purple with outrage just by mentioning it.)

For instance, the Gerber Grow-Up Plan, one of the most commonly advertised life insurance products for children, promises that "each time you make a monthly premium payment for your [policy], Gerber Life sets aside a small amount of money. Over time, this becomes the cash value of your policy. It represents how much your policy is worth at any given point in time."

However, the cash value can potentially be less than the amount you have paid in premiums, since only a portion of your premiums are set aside. And the cash value will certainly be less than you would have earned through a traditional investment had you invested the premiums instead.

While there are legitimate reasons for choosing a life insurance policy for your child, the investment strategy is not one of them.

Buying life insurance for your kids is a personal decision

Despite my about-face on children's life insurance, my two sons are still uninsured. Dad's superstition about tempting fate has stuck with me — and my husband and I are lucky enough to be in a financial situation where we could handle the monetary costs if something terrible should happen. My only big concern is if either of my kids receive a diagnosis that will make them ineligible for future insurance. But we have decided to live with that risk.

It's important that all parents think through the full consequences of buying or not buying life insurance for their children. It is a distressing train of thought, but a necessary one. No matter what you choose, a well-thought out decision will lead you to what's best for your family.

Like this article? Pin it!

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Emergency Medical Coverage Could Save Your Vacation

Holly Johnson — Mon, 14 May 2018 08:31:08 +0000

One of the great things about good travel credit cards is the travel-related insurance they include for free. Many cards include trip cancellation/interruption coverage, checked baggage coverage, and rental car coverage.

You might think that means you don't need to buy a traditional travel insurance plan for your trip. Unfortunately, there's one important type of coverage that credit cards tend to leave out — emergency medical coverage.

But when you're traveling far from home and break a leg or get an infection, what prevents you from racking up expensive medical bills? If you don't have travel insurance that includes emergency medical coverage, then nothing can stop the barrage of medical bills you'll likely face if you get sick. And although credit cards don't typically offer emergency medical coverage as part of their benefits, many travelers assume they do. (See also: When Is Your Credit Card's Travel Insurance Good Enough?)

Yes, you should buy emergency medical coverage

Beth Godlin, president of Aon Affinity Travel Practice, says that it's a "dangerous assumption" to presume that your credit card offers medical coverage. And it's equally dangerous to assume that your health insurance will cover you abroad. Chances are it won't, but you should check your policy to make sure.

"No one wants to get sick or have an accident, especially during a dream vacation, but it happens," says Godlin. "It could be a minor issue that's resolved by a visit to the cruise ship doctor, or it could be more severe and require medical attention or even an emergency evacuation."

For these reasons, travelers — particularly those heading abroad or to a remote location — need to understand if their current medical insurance would cover any care or even emergency evacuation required during their trip. If not, they should seriously consider buying the right supplementary coverage.

Carol Mueller, vice president of marketing at Berkshire Hathaway Travel Protection, suggests shopping around among travel insurance providers and finding one that offers at least $15,000 in emergency medical coverage for a basic trip. Even if you're healthy, "you never know what will happen when you travel," she says.

It's important to keep in mind how stressful and demanding it can be to become injured or ill abroad. Let's say you sprain your ankle, get a nasty ear infection, or have a heart attack. Mueller says that many people are surprised by the fact that the second you walk into the hospital, they ask for your credit card in many places around the world.

To protect your finances and keep your stress levels under control, Mueller suggests using a travel insurance provider that will work with medical teams anywhere in the world to make prepayments for your care. You may have the option to pay your medical bills with a credit card and then ask for reimbursement when you get home, but some travel insurance companies will go the extra mile to get your bills paid upfront.

"A good travel policy will not only make sure you're getting charged a fair amount, but they'll also ensure you're getting adequate care in the country you're traveling in," says Mueller.

Emergency medical coverage limits and inclusions

While $15,000 may be the minimum you should settle on for emergency medical coverage, you can buy policies with higher limits. Berkshire Hathaway Travel Protection offers plans with up to $50,000 in emergency medical coverage, for example.

How do you decide? Mueller says to look at your personal situation and the trip you're taking to determine how much coverage is reasonable. "If you're going to an all-inclusive resort for a week, you may need less coverage than if you're doing something active like hiking," she says. (See also: 7 Times Travel Insurance Is Worth It)

In terms of what is covered by emergency medical coverage, any medical expenses incurred while you're traveling are fair game. This includes medical care for both injury and sickness.

Mueller notes that you should also make sure you have cancellation coverage in your policy as an extra precaution in the case of illness or injury.

"Let's say that you leave for your trip within a few months, but you get sick right before you go," she says. "With travel insurance that offers some sort of cancellation coverage, you may be able to cancel your trip and get your money back if you follow your policy's terms and conditions."

Don't forget about medical evacuation coverage

In addition to medical coverage that pays for surprise bills related to an injury or illness, you should also make sure you have adequate emergency evacuation coverage. This is a separate type of insurance from emergency medical, so it will be listed separately on your travel insurance policy and have a separate limit for coverage.

Mueller says that you should look for a comprehensive travel insurance plan that includes emergency evacuation coverage with limits of $150,000-$500,000.

That may sound like a lot, but evacuation costs can be astronomical if you need to travel far to get home or to a hospital that can help with your condition. If you're taking a cruise, for example, think of all the expenses it would take to get you from the middle of the ocean to a hospital in the U.S. Your ship might have to get the Coast Guard involved, and you may require transport in several different vessels.

Or, imagine you're hiking the Swiss Alps and break your ankle. You may require pickup in a helicopter and transport in a plane. When you think of emergency medical evacuation coverage that way, it's easy to see how you could need $500,000 in coverage — or even more.

How to find the right policy for your needs

Both Mueller and Godlin suggest shopping around to find an affordable policy that provides limits you feel comfortable with. And when you're spending several thousand dollars on a trip, it's smart not to cheap out on coverage that can keep you safe from financial harm.

"It's important to consider the total investment made for a trip relative to the nominal cost to protect it with travel protection," says Godlin. "Sometimes a relatively small investment can have a huge payoff for traveler safety and peace of mind."

Since many plans have different tiers of coverage, Mueller suggests calling providers you're interested in working with and talking through the "what ifs" with them as you shop. "A lot of times, the insurance company will consult with you to figure out the best plan for your needs at the lowest cost possible," she says.

The bottom line: There's nothing wrong with using your credit card's travel insurance coverage to protect your trip, but you need emergency medical coverage to protect your finances in case you're hurt or sick. If you don't get it, your dream vacation could turn into a financial nightmare a lot faster than you think.

Like this article? Pin it!

This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Things That Affect Your Car Insurance Rates

Tara Struyk — Thu, 10 May 2018 08:30:16 +0000

If you've ever shopped around for car insurance, there's one thing you may already realize: Calculating rates is not an exact science. This is why you can get relatively different quotes from different insurers. It's also why you should shop around.

That said, your rate is also affected by a variety of factors — some of which you can control, and some of which you can't. You probably already know that factors like your gender, age, and driving record affect your auto insurance rates, so we reached out to a few experts to find out what other, lesser-known factors can affect your premiums. Here are a few.

1. The kind of car you drive

You can probably guess that if you drive a $100,000 sports car, you're going to have very high insurance rates. But there are a lot of other common details about your car that could affect your insurance rates.

According to Mark Nicholson, marketing director at auto marketing company Absolute Results Productions Ltd., these include the safety rating of your vehicle, its size and age, and even the likelihood that it might be stolen.

"Another factor some providers use is how much horsepower your engine has, because by their logic, it suggests that you're more likely to drive fast and are at greater risk of getting into an accident," Nicholson says.

This is why when you're buying a new car, it's a good idea to call for insurance quotes before you actually make your final purchase decision. If the new car you choose is considerably faster or sportier than the one you're driving now, that'll be reflected in a higher insurance rate.

For example, if you're considering a 4x4 SUV, you need to consider that a factor as well.

"Even if 90 percent of 4x4 SUVs will never be driven off-road, the insurance company will assume you'll want to take the occasional trek up a mountainside or fly down that dirt path through the woods. That's a higher risk, and you'll pay more for it," says Chris Burdick of Automoblog.net.

Even if you opt for a super-practical family sedan, you still might get stuck with high insurance premiums.

"You'd think that the more common the car, the less insurance will be, but that's not always the case," Burdick says. "For example, if you own a Honda Accord, it's considered to be one of the most stolen cars in the U.S. Same with the Honda Civic, Nissan Altima, Chevy Impala, and Toyota Camry. If you own a car that's stolen frequently, your insurance company will find that to be a higher risk and your insurance rates will go up accordingly."

Bottom line? Talk to your insurance company before you choose a new car to ensure that insurance rates for the vehicle you're considering are in line with what you're willing or able to pay. (See also: Here's How a Claim Will Impact Your Car Insurance)

2. Poor credit

Yup, they're watching you. In fact, your insurance company probably uses quite a few facts about you — both basic and personal — to calculate your car insurance rate. Some of the most common factors that will count against you and raise your rate include being under 25, being male, and having a poor credit score.

"We can see a difference in rate of 100 percent or more in premium increase for someone with poor credit," says Joe Espenschied, agency principal and owner at Insurance Brokers Group. "When we have a quote for someone with a clean driving history — but a very high insurance premium — it's due to credit."

At least credit (unlike age and gender) is a factor you can control. But there are other interesting details about your life that could impact your premium, too.

3. Homeowner status

Sophia Borghese, a consultant for Superior Honda in Louisiana, says that being a homeowner can impact your insurance rate, much like your credit score.

"Homeowners are lucky. It's thought that they do not have as many financial issues as renters. Because of this, insurance companies trust and reward them by not giving them the burden of high rates," Borghese says.

4. Marital status

Another personal detail many insurers consider is your marital status. Some insurers see married drivers as being more responsible than single ones. In fact, a 2004 study by the National Institutes of Health and reported on by DMV.org found that singles were twice as likely as married people to get into automobile accidents.

"The amount by which your rates drop can vary greatly based on your other circumstances, although men's rates tend to drop more than women's when they get married," says Steve Pritchard, founder of insurance comparison site Cuuver. "However, those who have a driving history free of accidents, and a clean driving record before getting married, could see their rates reduced by almost half of what they were paying before they tied the knot."

5. Your career

There's one more personal wild-card that could have an impact on your premium: your job. According to The Zebra's 2018 State of Auto Insurance Report, drivers with full-time jobs will save about $30 on car insurance over those who are unemployed, while active duty military and veterans will get a discount of about $50 over civilians. If you use your vehicle for work, you can also expect to see your rates go up.

6. How and where you drive

We all know that our driving records affect our insurance rates, but there are lots of other components of how and where you drive that can affect premiums as well.

The distance of your commute to work can affect your premium. After all, if you're on the road longer, you're considered higher risk. (Which is why you should definitely inform your insurance provider whenever your commute changes.)

Where you live and drive is also scored according to cases of vandalism, the number of claims and fraudulent claims in that area, cases of vehicle theft, and the occurrence of damaging weather, such as flooding or hurricanes.

But insurance providers are also moving beyond statistics and data about your past behavior to provide insurance based on how you are actually driving day to day. This involves installing what's called a usage-based insurance device into your car, which tracks your driving behavior.

"If you practice safe driving habits, don't frequently drive between 12:00 and 2 a.m., or use lots of high-traffic routes, you could qualify for up to a 30 percent decrease in insurance rates," says Anna Drake, the insurance producer at Insurance Shop LLC. Of course, if your driving habits are less than stellar, this type of policy could also drive your rates upward.

7. And then there's the "secret sauce"

While most insurance companies use some combination of the same or similar factors to calculate your insurance rate, there's no standard calculation.

"Each company compiles its own factors to find its own 'secret sauce' or 'ideal insured.' When the individual hits a company's sweet spot, it will reflect in pricing and coverage," says Janine Fixmer, an independent insurance agent at Agency Insurance LLC.

This why it's so important to shop around for the best rate and coverage, and to try to keep a handle on the factors insurance companies consider that you can control — such as your driving record, credit score, and the type of vehicle you choose to drive. (See also: 6 Mistakes to Avoid When Shopping for Car Insurance)

Like this article? Pin it!

This article is from Tara Struyk of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Choose the Best Primary Care Physician

Christa Avampato — Tue, 27 Mar 2018 09:30:20 +0000

Your primary care physician is someone with whom you should feel comfortable, so you can ask questions, get recommendations, and seek guidance for your health and the health of your family. But selecting one is not an easy decision. Here's is a list of questions to ask and things to consider before making your choice.

Do they take your insurance?

Insurance is a complicated business. What's covered, and at what cost to you (if any), are points that you must understand for your physical and financial health. Not all doctors take every form of insurance. The best way to know if a primary care doctor is covered under your insurance is to go straight to your insurance company and ask if the doctor is "in-network." If you have a doctor in mind, just provide their name to check on their network status. If you don't have a doctor in mind, the insurance company can help you find one who is in-network. (See also: The One Question You Need to Answer to Choose the Best Health Care Plan)

Are they taking new patients?

Though a doctor may be in-network, they may not be taking new patients. Solving that problem can be done in one of two ways: calling the doctor's office, or visiting an online site like Zocdoc.com. Zocdoc is similar to Yelp, in that it lists doctors and practices with reviews from patients, but it goes a step further in helping you find in-network doctors that are accepting new patients, and allows you to schedule appointments through the app. Though a doctor may not be listed on Zocdoc, they may still be taking new patients, so even if you don't see a doctor you're interested in on there, you should still contact them directly to inquire.

What extra services do they offer?

If you live in an area that has a competitive market, you may find that doctors offer extra services that are free or have a reduced rate. In New York City, I've found a number of doctors offering free telemedicine — conducting medical appointments over video chat — and will take questions by email from patients much more frequently than they used to. I've also found that many of them are offering more workshops and information sessions about different health topics that are free to patients and their family members. These extra services can make a world of difference.

What hours are they open?

Our immune system doesn't always break down between the house of 9 a.m. and 5 p.m., Monday through Friday. Often we need care on the weekends or in the evenings. If you need that added flexibility in your schedule, check to see if a doctor's office has coverage during non-traditonal hours.

If they don't, does the doctor have hours they're on-call or do they have a partner practice that can help you outside of their regular business hours? (See also: Urgent Care or ER? How to Decide Where to Go)

Who else is a part of the practice?

Because health care needs are growing more complex, many doctors' offices have additional medical staff (sometimes part-time, sometimes full-time) who are specialists in their fields. This can include an OB-GYN, allergist, dermatologist, pediatrician, and a variety of other specialists. Having all of these specialties in one practice provides a more inclusive level of care for patients and gives your primary care physician a greater understanding of your overall health.

Are they affiliated with a specific hospital?

If you have a hospital preference, it's important to check a doctor's affiliations. Many times their affiliation will impact which hospital you can go to if needed, and that's something you want to know before any hospital visits.

What do other patients say about the practice?

Patient reviews are also something to consider when choosing a practice. Zocdoc, Yelp, and Google Reviews are good places to check for reviews on the doctors, staff, and the practice.

"The first wealth is health," said Ralph Waldo Emerson. Though it can seem time-consuming to choose a primary care physician, it is well worth the investment. Your primary care physician is your front-line partner in your health, and it's not a decision to be taken lightly.

Like this article? Pin it!

This article is from Christa Avampato of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What Does Checked Baggage Insurance Cover?

Jason Steele — Fri, 02 Mar 2018 09:30:09 +0000

When you travel by air, it's only a matter of time until you have this experience. You wait at the baggage claim area as bags arrive until you realize that you're the only one left standing there. A few stray bags make laps around the carousel, but yours isn't among them. Whatever chance you have left to see your bags that day disappears when the carousel stops turning, and you trudge over to the baggage service area, feeling defeated.

There, you aren't given much hope as an indifferent airline employee asks you to describe your luggage size and shape, making you wonder what the fancy bar-coded tags were there for in the first place. With a little luck, your bag will be delivered to your home or hotel in a few days. But sometimes, you'll never see it again. (See also: The Airline Lost Your Luggage. Now What?)

Before this happens to you, you should understand the checked baggage insurance that your credit card offers, as well as other options, and what they will cover.

What the airline will cover

On a domestic flight, federal regulations state that the airlines are liable for $3,500 per checked bag. You'll have to submit a claim with details of the contents of your luggage, so the amount you're reimbursed could well be less than that $3,500. Also note that many items are excluded including jewelry, electronics, antiques, cash, and other monetary instruments.

When traveling internationally, the airlines' limit of liability is set by international conventions. If both countries are signatories to the Montreal Convention (more than 100 are, including the U.S.), liability is capped at 1,131 of an obscure international monetary concept known as "special drawing rights." In practice, this works out to about $1,600.

Credit card baggage insurance

Among the perks your credit card may offer are two different types of baggage insurance. The most common one is lost baggage insurance. As its name indicates, this coverage only applies when a bag is truly lost, not when it is merely delayed.

The other type of coverage that may be available from your credit card is baggage delay insurance, which is designed to help you temporarily replace necessary items while the airline searches for your bag. (See also: When Is Your Credit Card's Travel Insurance Good Enough?)

Lost baggage insurance

Many credit cards offer lost luggage insurance, which is secondary to the reimbursement offered by the airline. To use this insurance, as well as to make a claim with the airline, you must immediately report your lost baggage and retain written proof of your claim. The coverage will apply whenever you pay for your tickets or those of a family member with an eligible credit card, and in some cases, when you use your reward points.

For example, one popular card comes with $3,000 of lost luggage coverage per person for most items, and $500 per person for jewelry, watches, cameras, video recorders, and other electronic equipment. However, many items such as monetary instruments, documents, tickets, or furs aren't covered. (See also: Best Travel Reward Credit Cards)

Note that credit card coverage is usually secondary to whatever reimbursement the airline or other common carrier provides you. It's also secondary to any baggage insurance you may have purchased.

Baggage delay insurance

If you have your suitcases clearly marked with your name and contact information in multiple places, then it's unlikely that your bags will be lost forever. More likely is that they will fail to make your flight, or be misrouted to another destination. When this happens, it can take days, or even weeks before your possessions are returned to you.

Some premium travel rewards cards provide baggage delay insurance, depending on the length of the delay. For example, your benefits may kick in when your luggage doesn't arrive within six hours of you, so long as you paid for your flight with the card or with points from the card's rewards program.

Like lost baggage insurance, the coverage provided by your credit card is secondary, which means it will only cover expenses that the airline or any other coverage won't.

Typical credit card coverage might offer you up to $100 per day for items such as clothing, toiletries, and a charger for a mobile phone. The coverage is valid so long as you used your card to purchase the airfare. And as with lost luggage claims, it's vital that you report your delayed baggage before leaving the airport, and keep a copy of all of the documentation that you're given.

Baggage coverage through purchased travel insurance policies

Another way that you can insure your checked bags is to buy a travel insurance policy. While this coverage is not available by itself from travel insurance companies, it's often included as part of a larger policy that covers travel delays and cancellations.

For example, many travel insurance policies include lost baggage coverage ranging from $250 to $2,500. These policies also come with baggage delay insurance ranging from $50 to $1,000 per person. However, you will have to purchase the policy based on the cost of your trip, your destination, and other factors. (See also: Everything You Need to Know About Buying Travel Insurance)

Excess baggage valuation charges from the airline

Finally, you can purchase additional insurance from many airlines (though they don't call it "insurance" because they're not insurance companies). For example, United will sell passengers excess valuation for $1 per $100 of coverage beyond its liability limit of $3,500 for travel within or between the United States, Guam, Puerto Rico, and the U.S. Virgin Islands. So, if you need an additional $1,000 of coverage, it will cost you $10 each way.

Suggestions

Since you can use both the coverage offered by the airlines and your credit card, you can be reimbursed for most items you check. Nevertheless, it's important to closely examine your credit card's baggage insurance policies if you plan on relying on its coverage. And if you have to pack items worth more than the value of these policies, consider purchasing excess valuation from your airline.

By closely looking at what these policies cover, and their limits, you can choose the right combination of coverage for your needs.

Like this article? Pin it!

This article is from Jason Steele of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Best Money Tips: Ways to Maximize Medicare Benefits

Amy Lu — Thu, 01 Mar 2018 09:30:09 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found articles on how to maximize Medicare benefits, countries where you’ll get the most bang for your buck, and a practical guide to saying no.

5 Kinds of Insurance Every Retiree Should Consider

Dan Rafter — Thu, 01 Mar 2018 09:30:09 +0000

Your insurance needs don't remain constant throughout your life. You need different insurance coverage when you're single and in your 20s than you do when you're raising a family in your 40s. When you retire, your insurance needs will evolve once again.

There are certain types of insurance protections you'll no longer need after leaving the workforce, and other types that you'll want to add. Here is a primer on the kinds of insurance that every retiree should consider.

1. Health insurance

You'll absolutely need health insurance after you've retired. Health care costs are only rising, and seniors tend to spend a large percentage of their income on medical care each year.

A study released by Fidelity Benefits Consulting said that the average 65-year-old couple retiring in 2017 would need $275,000 to cover their medical expenses throughout retirement. That number isn't falling, either. Fidelity reported that the 2017 figure is up from the $260,000 that the average 65-year-old couple needed in 2016.

Most seniors will qualify for Medicare, the federal health care insurance program, when they turn 65. Medicare isn't free, but it does cost far less than what you'd pay for private insurance. Medicare covers a lot, but it doesn't cover every medical service you might need.

Do you need to purchase supplemental health insurance to boost the coverage you're already getting with Medicare? That's not an easy question to answer. It all depends on your health and how often you plan on visiting a doctor after you retire. For many retirees, Medicare may be adequate. (See also: 5 Common Medicare Myths, Debunked)

2. Homeowners or renters insurance

Will you still own a home after you retire? If so, you still need your homeowners insurance policy. This policy will pay out to help you rebuild if your home is damaged by a fire or other natural disaster. It will also help you pay for any items inside your home — such as electronics, clothing, furniture, and jewelry — that get stolen or damaged in a disaster.

Renters insurance works the same way, but it protects people who are renting an apartment. If you plan on ditching your home and renting after you retire, make sure to invest in a renters insurance policy. Think about how much money you'd need to replace your valuables if they were stolen or destroyed. (See also: 5 Reasons You Definitely Need Renters Insurance)

3. Auto insurance

If you plan to keep driving after retirement, you'll need to pay for auto insurance. It's illegal in most U.S. states to drive without car insurance.

Maybe you're planning to sell your car and move into an urban neighborhood after you retire. Instead of doing your own driving, you plan to walk, take public transportation, or Uber to grocery stores, movie theaters, and restaurants. In this case, getting rid of your car insurance might make sense. But even if you're hanging onto your car only for emergencies or long trips, you'll need to keep your auto insurance policy.

4. Life insurance

Life insurance is usually one type of policy you can drop after retirement. After all, life insurance is a way to protect your loved ones who are dependent on your income. Once you get to retirement age, these dependents — usually your children — should be self-sufficient. They won't need a payout after you die to pay their bills.

But what if your spouse or children still aren't financially self-sufficient by the time you retire? If that's the case, you should hang onto your life insurance policy. Maybe you have a child with special needs. That child might still rely on financial assistance from you. What if you were gone and you didn't have a life insurance policy? Would that child still get the financial assistance necessary?

In most cases, retirees no longer need life insurance policies. But for special cases, keeping the policy is the smart move. (See also: When Dropping Your Life Insurance Is the Right Decision)

5. Umbrella insurance

What if someone was visiting your home and seriously injured themselves? Would your homeowners insurance policy provide enough protection? Maybe. But umbrella insurance can provide retirees with the peace of mind that they'll be protected even if their homeowners insurance doesn't offer enough coverage.

Umbrella insurance provides extra liability coverage above the limits of your homeowners and auto insurance policies. Basically, it pays out in cases where your homeowners and auto policies don't pay enough to cover all of the damages for which you are responsible.

Say you get into an auto accident that ends up with a liability claim of $1 million. If your auto insurance only covers a maximum of $500,000 for liability, your umbrella policy would cover the remaining $500,000. (See also: Beware: Your Insurance May Not Cover These 8 Losses)

Like this article? Pin it!

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Myths About Health Savings Accounts — Debunked!

Dr Penny Pincher — Wed, 21 Feb 2018 10:01:05 +0000

Health savings accounts (HSAs) provide a tax-advantaged way to save and pay for health care costs. If you have a high-deductible health plan (HDHP), you can contribute pretax income into an HSA and use the money to pay for qualified medical expenses.

The rules and requirements for participating in an HSA can be a little confusing. As a result, misinformation has given rise to several myths that deter people from taking advantage of HSAs. Let's take a look at some of the most common ones. (See also: 10 Reasons an HSA Is Actually Worth Having)

1. HSA funds are lost if you don't spend the money by the end of the year

This is a point of confusion that tends to scare people away from participating in a health savings account. It's not true. Funds leftover in your HSA are not lost at the end of the year, they are yours until you spend the funds. The prevalence of this myth comes from a different health program, the flexible spending account (FSA). You do lose funds in an FSA if you do not use them by the end of the year.

2. You can only earn low interest on your HSA funds

Actually, you don't have to leave your HSA funds in a low-interest savings account. You can invest HSA funds in stocks and other investments for higher growth potential. This is especially beneficial if you don't plan to spend your HSA funds any time soon and can take advantage of tax-free growth for as long as possible. Investment options vary by HSA provider, and some require a minimum balance (such as $1,000) before you can put your HSA funds in investment options.

3. HSA funds can only be used for hospital bills and major medical expenses

Health savings accounts are not only for major medical costs. The IRS identifies a long list of health-related expenses that HSA funds can be used to cover, including smaller expenses that may surprise you. A few examples include:

Acupuncture
Bandages
Chiropractic treatment
Contact lenses
Dental care
Eyeglasses
Hearing aids
Prescription drugs
Physical exams
X-rays

4. You can't get an HSA if you are self-employed

Many employers offer HSA programs as a benefit. Some even kick free money into HSA accounts for employees. However, you don't need to have an employer to open a health savings account. If you sign up for a high-deductible health plan (HDHP), you can fund an HSA through an HSA provider and get all of the same tax benefits.

5. If you never have health expenses, you'll never be able to use your HSA funds

Most people can expect to have significant medical expenses at some point in their lives, especially as they get older. But what would happen to your HSA funds if you stayed healthy and never had any health care expenses? Beginning at age 65, you can withdraw your HSA funds for any reason without penalty, only paying income tax on funds you draw. This feature means that your HSA effectively turns into a traditional IRA when you hit 65, with the added benefit that if you do have qualified health expenses, you can access your HSA funds tax-free for those costs.

6. High-deductible health plans only benefit healthy people with low health care costs

If you have a lot of medical costs, you may decide that it doesn't make sense to sign up for a high-deductible health plan when a low-deductible plan will step in earlier to pay for your care. This isn't looking at the whole picture. The advantages of using an HSA can turn out to be a smart choice for many individuals and families. The higher potential out-of-pocket health care costs with an HDHP can be offset by the lower premiums and tax benefits of a health savings account. You can use an HSA vs. traditional health plan calculator to help you decide which is best based on your anticipated health expenses.

7. HSAs are a hassle to use

This is one of the myths that stopped me from signing up for an HSA at first. I worried that it would be too difficult to get funds out of my HSA when I had medical expenses. However, I found that it is actually easy to access HSA funds. These are some of the features that make an HSA so easy to use:

You can get an HSA debit card to use when paying for health care expenses.
You can write a check to pay for medical expenses, then transfer money from your HSA into your bank account to cover it.
Health savings accounts typically have online tools you can access from your computer or phone to check your balance and see a record of your transactions.

8. If you lose your job or change employers, you lose your HSA funds

Not true! HSA funds are portable from one employer to another, and you get to keep your HSA funds even if you stop working altogether. If you want, you can even change your HSA provider without changing employers.

Like this article? Pin it!

This article is from Dr Penny Pincher of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What Kind of Auto Insurance Do Uber Drivers Need?

Holly Johnson — Wed, 21 Feb 2018 09:31:09 +0000

If you're scheming up a way to make extra money this year, it's likely you've considered driving for Uber or Lyft. There are few requirements to get in the door, after all, and you can work your own schedule. If you're over the age of 21, have a newer car, and have a clean driving record, you can apply to become a driver for Uber or Lyft and get started fairly quickly. (See also: How to Get a High Rating and Make More Money as an Uber Driver)

But that doesn't mean this side hustle comes without risks. Unlike other avenues to earning extra money, like freelance writing or picking up a traditional part-time job, driving people around in your car comes with real-life financial implications if you get into a crash.

So what type of insurance do you need to drive for Uber or Lyft? Generally speaking, your personal auto insurance policy won't cover you if you get into an accident while you're driving for Uber or Lyft. In fact, your auto insurer may be inclined to drop you from your policy if they find you haven't disclosed that you're driving for a ride-share service, notes NerdWallet.

Uber and Lyft offer drivers some coverage

Ride-share companies have initiated their own forms of insurance to cover drivers when their personal policies fail to provide coverage. That means it's secondary coverage — you'll first have to file a claim with your own insurance. And Uber's insurance comes with a $1,000 deductible, while Lyft's deductible is $2,500. But it's better than nothing.

Coverage levels depend on where you are in the ride-sharing process. If you drive for Uber, for example, you have different levels of coverage when you're waiting for a call, when you're on your way to pick up a rider, and when you have a rider in your automobile.

While you're waiting for a request

When your app is turned on and you're waiting for a ride request, you are covered by Uber for your liability to a third party if you're in an accident and at fault. Coverage is at least $50,000 in injury liability per person with $100,000 in total liability per accident. You also get $25,000 in property damage liability per accident, notes Uber. This does not include comprehensive/collision coverage or coverage for damages caused by uninsured motorists, however.

When you're on your way to pick up a rider

At this point, notes Uber, you're covered for three things: your liability to a third party for damages or injuries up to $1 million, any injuries caused by an underinsured/uninsured motorist, and collision and comprehensive coverage if you also have this coverage on your personal auto insurance policy.

Underinsured and uninsured motorist bodily injury coverage covers "any occupant of your vehicle in case of an accident where another party is at fault but does not have insurance or is underinsured," notes Uber. Hit and run accidents are also covered, and the total amount of coverage for bodily injury is once again set at $1 million.

The collision and comprehensive coverage offered during this period kicks in whether an accident is your fault or not and is limited to the cash value of your vehicle. A $1,000 deductible comes into play if you plan to use this coverage.

When a rider is in your car

You have the same type of coverage when carrying a passenger as you do when you're on your way to pick them up. In addition, however, the rider in your car is also covered.

Of course, when you're not driving for Uber and you're using your car for personal use, none of this coverage comes into play. During these times, you'll rely on your personal auto insurance policy for coverage in the event of an accident or injury.

Lyft liability coverage works similarly in that it's offered in different tiers based on where you are in the ride-share process. Coverage limits vary slightly, however, as do the types of coverage offered. Make sure you understand what your ride-share company's insurance policy offers and applicable coverage limits before you rely on it to cover your ride-share driving business.

Ride-share or commercial insurance

There are times during the ride-sharing process when your company's insurance may not be enough. For instance, Uber's insurance does not include comprehensive/collision coverage or coverage for damages caused by uninsured motorists while you're waiting for a ride request. You may also decide you want higher coverage limits than your company offers.

In those cases, consider buying separate insurance to fill in your coverage gaps. Insurance companies such as Allstate, Farmers, and Geico have begun offering individual ride-share policies that cover drivers for services such as Uber or Lyft while they're on the job, but these policies aren't available in all states. If you can't buy ride-share insurance in your state, another option is commercial auto insurance, but unfortunately, commercial policies are often prohibitively expensive ($3,000-$5,000, according to the Money magazine website) for Uber or Lyft drivers trying to turn a profit.

If you live in a state where ride-share coverage is offered, buying this type of coverage — or adding it to your personal policy — is probably your best bet. Fortunately, auto insurance for ride-sharing isn't overly expensive (typically $6-$20 a month). Geico Insurance, for example, offers ride-share coverage in most states (AL, AZ, AR, CT, CO, DE, DC, FL, GA, ID, IL, IN, IA, KS, LA, ME, MD, MN, MS, MO, MT, NE, NM, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, VT, VA, WA, WV, WI, and WY) and can cost as little as an extra $150 per year on top of your personal auto policy, according to NerdWallet.

Like this article? Pin it!

This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What Exactly Does Trip Cancellation Insurance Cover?

Holly Johnson — Tue, 20 Feb 2018 09:30:09 +0000

Travel insurance is a broad term used to describe the different types of travel coverage you can get for a trip. You can get coverage for lost or delayed baggage, overseas medical coverage, or insurance to cover travel delays, for example. While each type of coverage is different, they all serve the same purpose: to protect you from out-of-pocket expenses if something goes wrong during your travels.

Among the different types of travel insurance available, trip interruption and cancellation coverage is one of the most popular types out there. This coverage provides reimbursement if your trip is interrupted or canceled for a covered reason. If you need to cancel your trip before you leave because you break a leg on your way to the airport, for example, the cancellation component of your coverage kicks in.

The trip interruption part of the policy comes into play when your trip is abruptly or accidentally interrupted for a covered reason — say, if you travel abroad and need to come home early because your child gets sick.

Just like other types of travel insurance, coverage limits and specific details for trip cancellation/interruption coverage vary based on where you get your policy. We'll go over what trip interruption and cancellation insurance might cover, as well as the best place to score an affordable policy.

Using coverage provided by your credit card

First things first. If you're looking for a way to get trip cancellation/interruption coverage for free, you may be able to score this perk and other benefits with one of the top travel credit cards. Believe it or not, many of these cards offer trip cancellation/interruption coverage for free as a cardholder perk. For the coverage to apply, however, you have to have used your card to pay for the trip associated with your claim. (See also: 6 Types of Travel Insurance Credit Cards Include That You Didn't Know About)

Coverage limits and other details can be drastically different from card to card. One popular credit card trip cancellation/interruption insurance policy covers you when you use the card for prepaid tours, travel, and accommodations. However, coverage is considered secondary to that of any travel insurance you've purchased or reimbursement offered by the common carrier — in other words, the airline, bus, train, or cruise operator. That doesn't mean you have to buy your own insurance policy in order to use the credit card coverage, though.

Let's say that you need to cancel a trip, including airfare and hotels that set you back $2,000. If you already have a trip cancellation policy that covers $1,000 in related bills, but used your credit card to pay for the trip, your credit card coverage would kick in to cover the other $1,000 you spent. If you don't, you could use your credit card coverage on its own up to its included limits.

More good news with this particular policy, however, is that immediate family members of the cardholder are covered — even if the primary cardholder isn't traveling. This means that a spouse who is stranded in another country could gain access to your trip cancellation/interruption insurance benefit even if you're not there — provided you used your eligible credit card to pay for their trip.

Even better, this coverage is worth up to $10,000 per covered trip with a maximum limit of $20,000 per occurrence and $40,000 over a 12-month period. And yes, this coverage works even if you paid for part of your trip with points.

Other credit cards may limit your coverage to $5,000 per trip, or even less, but may not have an annual coverage limit. And some cover any travel companion whose travel was bought with the credit card.

Reasons covered by credit cards for trip cancellation or interruption

In order to use these types of coverage, you'll need to document a legitimate reason for the cancellation or interruption. Common reasons that are usually covered include:

Injury, illness, or death of the cardholder, a traveling companion, or an immediate family member.
Severe weather or natural disaster that prevents the start or continuation of a covered trip.
Terrorist action or hijacking.
Jury duty or receipt of a subpoena that cannot be postponed or waived.
Bankruptcy or financial default of the cardholder's travel company.

More generous credit card policies may even cover you if someone in your party is laid off from their job, if your pet is injured and needs emergency medical care, or if your permanent residence is burglarized or deemed unsafe. (See also: What Exactly Does Credit Card Travel Accident Insurance Cover?)

Reasons not covered by credit cards for trip cancellation or interruption

Here's what's usually not covered. Canceling or interrupting your trip because of:

Injury or illness sustained after traveling against a doctor's orders.
A work conflict.
A pre-existing medical condition.
War.
Change in your plans or financial circumstances.

So if you thought you could afford a weeklong trip to Paris but realize as the time gets closer that it's really going to blow your budget, your coverage can't help you recoup any cancellation costs.

Because credit card policies vary greatly in what they cover, you should be careful of which card you use you to pay for travel if you want to take advantage of trip cancellation/interruption coverage or other travel perks. While "free" coverage is better than nothing, it pays to know what is and isn't covered under your plan — and what limits to expect.

Buying your own trip cancellation/interruption coverage

If you don't have a credit card that offers trip cancellation/interruption coverage, you can purchase your own plan. Companies like Travelex Insurance and Seven Corners make it possible to buy nearly any type of travel insurance coverage, and to customize your plan so it meets your unique needs. (See also: When Is Your Credit Card's Travel Insurance Good Enough?)

That said, the vast majority of policies offer comprehensive coverage, which includes cancellation/interruption coverage, but also medical and emergency medical coverage. These policies usually cost 4 to 10 percent of the cost of your trip. But just like the coverage you get for free with a credit card, plan limits and exclusions vary depending on the policy you buy.

Let's say you purchase trip cancellation/interruption coverage from Seven Corners as part of a broader travel insurance package. According to the travel insurance company, the "interruption" component of your coverage will kick in to cover the nonrefundable, unused portion of your prepaid trip costs and the additional cost to return home or rejoin your group due to a covered reason. Covered reasons listed by the company include instances of sickness or injury, jury duty, layoff, traffic accidents, and more.

Trip cancellation coverage, on the other hand, can refund the prepaid, nonrefundable costs of your trip, such as airfare, cruise tickets, tour bookings, and hotel reservations in the event you need to cancel for any of the covered reasons.

Coverage ceilings

But how much coverage will you have? It depends on the plan you choose. Unlike credit card coverage that is offered with set limits as a free benefit, travel insurance you purchase yourself can be tailored to your needs.

Some travel insurance companies offer trip cancellation/interruption coverage up to the entire cost of your insured trip. Based on personal experience, however, some trip cancellation/interruption insurance offered through other travel insurance providers comes with lower limits than what you get for free through a credit card. With Allianz Travel Insurance, for example, limits for cancellation and interruption can be as low as $1,000 per year. The same limit applies to the World Nomads standard plans.

While having $1,000 in coverage might seem sufficient, it may not be close to what you need if you're traveling abroad or planning a once-in-a-lifetime trip. Imagine you booked two round-trip business flights to Spain for $1,500 each and a Mediterranean cruise for another $2,200. If you had to cancel because a family member became gravely ill before you left on your trip (or any other covered reason), either of these plans could leave you drastically underinsured.

Cancel-for-any-reason policies

It's important to note that you can also purchase "cancel-for-any-reason" travel insurance policies — or add on the coverage to your regular travel insurance. Unlike traditional interruption/cancellation policies, these plans let you cancel for any reason — even if you just feel like it — as long as you do so no later than 48 hours before your scheduled departure.

Cancel-for-any-reason policies typically cost 8 to 12 percent of your trip's cost and will reimburse you for 75 percent of covered expenses.

When should you buy a policy?

Because coverage limits for trip cancellation/interruption insurance offered through certain travel credit cards is so robust, it almost always makes sense to use this coverage if you have a card that offers it. However, you should read the fine print to make sure you know exactly what's covered, what's not covered, and what you need to do to keep your policy intact.

If you don't have a free trip cancellation/interruption policy already, you can always sign up for a travel credit card that offers this coverage or buy a travel insurance policy on your own. As with any coverage you buy, however, you should make sure limits are high enough that your insurance will be adequate if you need it.

Like this article? Pin it!

This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: