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My situation is different than yours.  As a result, you need to make decisions based on your needs.  The following is a description of the life insurance I have in force.

 Scenario: I have a wife and two children.  Both children are in college.  Our primary concern is death benefit. 

 Myself:     $100,000       Joint 10-Year Level Term (with my wife)

                        $500,000       20-Year Level Term

                        $350,000       15-Year Level Term                        

                        $950,000       total death benefit

 

 My wife:  $100,000       Joint 10-Year Level Term (with myself)

                        $250,000       20-Year Level Term

                        $  50,000        Group Term – Employer                              

                         $400,000       total death benefit

 

 Son:          $100,000       Annual Level Term

                        $  10,000        Children’s Rider under my 20-Year Level Term

                        $110,000       total death benefit

 

 Daughter: $100,000       Annual Level Term

                           $  10,000        Children’s Rider under my 20-Year Level Term   

                            $110,000       total death benefit

 Advice:

1. Buy more level term insurance while you are young and healthy.  It is rather inexpensive and you will have enough as you get older and the need increases.
2. Have adequate insurance on the wife. 
3. The mortality tables have a spike at the ages of 16 and 21.  Before your children start driving, purchase a level term policy.  A $100,000 policy will cost a little over $100 a year.
4. Generally, you should keep your life insurance and investments separately.
5. The death benefit is not taxed, but it does go towards your estate amount.  Be careful not to create an estate tax problem. 

Statistics indicate that 48 % of American employers that have workers’ compensation insurance are overcharged by the insurance companies.  The lack of knowledge of the rules regarding the generation of the final premium is a major contributor.

Your agent may have years of insurance experience, written your account for years and be a swell person.  Unfortunately that does not mean your agent comprehends the entire process of deriving your final workers’ compensation premium.  Your agent’s ignorance can cost your company thousands of dollars.

The knowledge must be sought out by the agent.  In over twenty years of continuing education and designation updates I attended hundreds of seminar topics.  On numerous occasions the topic was workers’ compensation.  None of the instructors lectured on the proper rating of the work comp policy.  I was fortunate.  I learned from an experienced student of the insurance industry and I studied the workers’ comp manual. 

 How can you tell your agent needs assistance?

 Ask your agent to explain the valuation date.  The valuation date is a simple concept and your agent should tell you the following:

        1. It is 6 months from your anniversary date (many times your anniversary date is your current policy effective date).

        2. It’s is the date that all claims are examined to evaluate your experience modifier.

        3. It’s the date that your open claims need to be closed by or loss reserves need to be lowered to reduce your modifier.  

 This is a basic rating question.  If your agent has troubles answering the question, the agent does not know when important deadlines occur.  You need a second opinion regarding the correct rating of your policy.  When you get your second opinion, be sure it is from an agency that specializes in workers compensation and ask the same valuation date question. 

 The insurance industry is a cyclical business.  During the past few years, the industry has been in a soft market.  The soft market is characterized by lower premiums and ease of placing your insurance business.  The cycle will soon turn into a hard market.  Due to the recent storms many people along the Texas coast and Houston area have begun experiencing the hard market with higher premiums.  Now is the perfect time to get a second opinion.  Don’t wait until your renewal.

       1. Does your company have a 12 month policy?  The most common policy term is a 6-month policy.  The annual term is becoming more common.  Often the annual policy will be cheaper over a 12-month period.

       2.  Does your company’s charge more upon renewal?  There are some companies that actually charge you more if you are an existing customer.  It’s the “let’s get them with a low rate, then make money on them later” routine similar to some satellite TV and electrical providers.  I don’t understand the practice, but I’ve heard it’s easy enough for a caveman.

         3. How much in premium is higher liability limits? Nobody should have the minimum auto liability limits!  You might be surprised at how little it costs to increase your auto liability limits.  There are a few companies that the premium is actually less for more protection.

         4. What are your payment options? Many companies are giving significant premium credits to pay in-full or to put your payments on an automatic bank draft.

          5. What deductible options do I have? Agencies have a tendency to quote the most common choices.  Currently, the $500 deductible is our most common collision and other than collision deductibles.  Many times the increase in premium for a $100 deductible other than collision coverage is minimal.

Insurance scoring is simply a credit check.  It is the reason why your agent asks for your social security number. 

 Yuck!  This practice is an embarrassment to the insurance industry.  Insurance scoring is flawed and inaccurate.  It should not be permitted.  Unfortunately, neither you nor I get to set the rules.  To understand insurance scoring you need some background history.

 Insurance scoring began during a battle between the insurance companies and the Department of Insurance (DOI).  The companies were criticized by the DOI for not insuring residents in certain areas (primarily low income areas).  The insurance companies that insured those areas charged much higher premiums.  The increased hazards of theft and vandalism substantiated the companies’ decision. 

 The DOI claimed the practice was “redlining”.  The insurance companies claimed the practice was a principle of insurance (charge a rate based upon the risk).  The DOI told the companies to cease the practice.

While the argument was in full debate, insurance scoring was introduced as a factor to determine the consumers’ premiums.  What is the average insurance score in the low income areas?  Do you believe the timing for insurance scoring was coincidental?  Does good credit guarantee good driving habits?

 The amazing part of the story is the DOI upheld that insurance scoring was a good underwriting guide.  As a result, the companies that were charging more to low income residents are currently charging the residents more because of their poor credit.

 Advice: Use the free credit reports to check on your credit.  Many times the credit reports are erroneous.  Perhaps your credit is unfairly reported and causing your insurance rates to be higher.

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