Archive for the ‘Insurance’ Category

Homeowner’s Insurance-What do Millionaire Nurses Do?

Monday, February 15th, 2010

Homeowner’s insurance is one of those boring things you deal with in life-you would rather be grilling out, or taking a long hot bath, than thinking about insurance.

But, if something happens to your home, such as a fire, severe leak, or burglary- then you will be extremely glad you have it.  And if you rent, keep reading for advice for you too!

What exactly is homeowner’s insurance-it is an insurance policy that will help you re-build, repair, or replace your home, or the items in it, if something happens to it.

What are a few precautions to take with purchasing homeowner’s insurance:

  • Choose a high deductible, and make sure you have a super-duper emergency fund!
  • Make sure you get replacement value on home and contents, otherwise, the depreciation (loss of value over time) of your stuff, will result in your getting insufficient money to replace what you lost.
  • Make sure you comparison shop, and try to bundle it with other insurance for additional savings.
  • Remember, homeowners insurance, does not cover damage from flooding, and frequently wind damage.  So make sure you find out those details, and make other insurance arrangements to cover those areas.
  • Use a video camera to video your home and contents-make sure you itemize things that you think are valuable, like guns, jewelry or art.  And put that video somewhere besides your home- in a bank safe-deposit box, or with a relative-it will not help, if the video gets burned up in the fire…..

Insurance companies have been much more aggressive at raising rates, and canceling policies on folks who have claims or losses.  So keep your emergency fund intact, and use that instead of filing an insurance claim for small losses.  Save your insurance for the “heart attack, not your cold or flu!”  It may not be fair, but that is the way it is……

And just like in our discussion on life insurance, make sure the companies you choose are quality companies, who will be there when you need them.

Your Home is Your Castle! Photo by kansas explorer

Now what about people who rent-they aren’t homeowners.  Well, they may not be homeowners, but they do have stuff-so make sure you carry what is called “contents” coverage.  This covers your furniture, and other household goods.  Again, if you have anything valuable, that may be difficult to replace have it itemized on your policy-the company may require an appraisal, to make sure the value you quote is accurate.

If you have any questions or comments, please let us know.  If you have had any experiences with your homeowner’s insurance-give us a shout.

And remember, you can join us on our journey to helping others become “Millionaire Nurses”, by joining our team.  We will send you the E-book, “Emergency Money Resuscitation” as well as an emailed “mini-course” on money management.   These two items are full of money saving tips-that will help you save hundreds if not thousands.  I will also send you our newsletter,”The Millionaire Nurse Money Letter”

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Life Insurance, What do Millionaire Nurses Need?

Thursday, February 11th, 2010

Life Insurance-what kind do you need?  How much do you need?  What company do you go through?

Keep in mind the purpose of life insurance:

  • To replace your income, if you die-allowing your family to live without a significant change in life-style.
  • To pay the costs of burying you.
  • To help pay any bills or debts you may have.

Now your family is not responsible to pay debts that are just in your name.  After the estate is settled if their is still money you owe, they are not legally required to pay them.  But many families are bothered by that-and why not, if you owe the money-why should someone get stiffed-just because you are… (Sorry, couldn’t help it.)  So having enough money to pay those bills is a good thing to do.

What type of insurance do you need?

  • Term Life Insurance
  • Term Life Insurance
  • Term Life Insurance

Now, there are a lot of variations now, with whole life, universal life, universal variable life and other new versions, but they all have a savings plan, that has a low interest rate or growth rate.  There are also high sales commissions associated with the policies, adding to your costs, but not to your benefits.

Salespeople argue that whole life type policies are the only way to get people to save money-not for “Millionaire Nurses”.  The Millionaire Nurse understands the importance of setting up savings, and retirement plans, and don’t have to use overpriced and under-performing vehicles like a “life insurance” policy to do that for them.

How much do you need?

  • If you are still in deep in debt, see if you have insurance at work, with your bank or credit union to pay for burial expenses-usually less than $15,000 worth of coverage-that is frequently free, or very inexpensive.
  • When you debts are under control-then buy enough coverage so that your income can be replaced.  If you need$40,000/year in income then at 4% payout per year, that would be close to a million bucks of insurance, if you didn’t want to touch the principle.  Now, obviously if you draw down some of the principle over time, and increase your rate of return-you can get by with much less coverage.
  • To simplify, many experts just say, buy 10-20 times your income in coverage.
  • Once you are out of debt, have retirement savings in place, and have paid for your home, you can decrease or eliminate your insurance coverage.

Which company do you use?

Millionaire Nurses get the best price.  How do you do this? By comparing prices with highly rated companies.  (Don’t buy insurance from a company that is not rated highly with AM Best, Standard and Poors, or Moody. Get several quotes, and of course those who don’t smoke, and are taking care of themselves frequently get discounts-so stay healthy…

Another thing to remember is that “term” insurance means you are insuring yourself for a certain length of time.  Some policies guarantee renewal at the end of the term-the rate will be higher but they will write you  a policy. This can be important if you develop a chronic illness.

So, “Millionaire Nurses”, don’t have paralysis by analysis.  Make an appointment with yourself soon- to study, and execute on buying your life insurance coverage, it is something “Millionaire Nurses” Do!

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Posted in Insurance, Uncategorized, personal finance | 1 Comment »

Mortgage Escrow Accounts-The What, Whys, Wherefore's, and the Do I Havta's?

Friday, January 15th, 2010

Escrow accounts were the topic of a recent question over at Cash Commons.  This is a great money, and personal finance question and answer site, hosted by “The Mighty Bargain Hunter”.

I thought I would discuss a few of the details about escrow accounts-considering the number of houses being sold to first time home buyers, with the recent tax credits, combined with low prices.  This is a great time to buy a home, if you are READY.

I found this link  very helpful in explaining escrow accounts, and it links to pages with examples of how the monthly amounts are figured.

In summary, an escrow account is a type of savings account, required by many mortgage companies, and their guarantors, such as FHA, VA that are designed to ensure there is money available to pay  your taxes and  home owners’ insurance.  The details about the amount required monthly  is given to you when you close your loan.  (One of the 100 pieces of paper you sign or initial!)

The escrow amount, is usually built into your monthly payment- many people forget there is one until they get a notice that they need to increase the amount because taxes or your insurance went up.

The reason for a mortgage escrow account, is to protect the lender, or mortgage holder from losing their collateral-your home.  How could this happen?

  • you fail to pay your homeowners insurance- a fire occurs-now your home has no value-the lender’s collateral-gone with the wind….
  • you don’t pay your taxes on your home, your state or county, sells the home on the courthouse steps-your mortgage holder is screwed!

Obviously, in this day and age, they can’t afford that-so-they require escrow accounts.

Now if you pay 20% down, have no PMI (Private Mortgage Insurance) and are working with a private lender, escrow accounts are not always required-just ask your lender-I haven’t had one in years.

Now the rules for escrow are complicated, but there are protections to keep unscrupulous mortgage companies from holding on to too much of your money for too long.  The Real Estate Settlement  Procedures Act or RESPA covers the rule lenders must follow.  This includes rules that prevent them from making you deposit excess amounts-if the amount deposited  is in error, and your balance builds up above 50 bucks above that needed-they are required to send you the money within 30 days.

But the lenders also have rules that allow them to have a “cushion” to make sure there is enough to cover expenses as they come due.  They can also require you to increase your monthly deposits if the account balance drops-or send a one time amount if they feel is necessary.

Now, of course, when you have someone “looking after you” ie paying your taxes and insurance, then what happens when they screw up and don’t pay.  This is one of those areas that causes great heartburn, because insurance may get canceled, tax liens placed and other potentially bad things happen.

So Millionaire Nurses know who is in charge of looking after them-THEY ARE!  As part of your financial planning, put a tickle reminder on your calendar to email or call your insurance agent periodically to make sure everything is in order.  Get to know the insurance people in your life enough so they will be comfortable calling you if there is a problem.

If you get a notice about a tax bill being late, don’t assume the mortgage holder will handle it-check on it right away-before penalties start to pile up.

Yes, you may say you don’t owe them, it wasn’t your fault-how easy will that conversation be with the folks at the courthouse.

So deal with these problems early before they become huge problems.  Just like an IV site infection,  prevention is way better than  sepsis, gorillacillins,  and ICU-become proactive with the biggest investment in your life,  YOUR HOME!

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Posted in Insurance, Personal Finance 101 | No Comments »

Health Insurance: Your not so "Public Options"!

Thursday, October 29th, 2009

With all the hoopla/controversy about health care in the news, I thought a post on your health insurance, and how “Millionaire Nurses” deal with health insurance issues.  Another reason this is a good time to discuss health insurance is it is open enrollment for many organizations.

For those of you who are not familiar with the term, open enrollment is the time when many businesses/organizations allow changes to be made in the businesses benefit plans.  These might include, in addition to health insurance, retirement plans, short and long-term disability, dental, pharmacy benefits, and vision plans.

We will discuss the health insurance option today.  My wife’s employer offers health insurance options through two major national insurers.  They offer the same options: a PPO plan, a HMO plan, and a high deductible plan that can be tied to a health savings account.

These choices can be difficult to make.  Most PPO’s give you the most choice regarding which physician you use.  Most PPO plans have a  slightly higher deductible and co-pay than the HMO’s- both of which have gone up in the last few years.  If you use an out-of- network provider, then your co-pay, deductible’s are more expensive.

With a HMO, you lose freedom in regards to your choices of primary care providers and your options of sub-specialists.

The high deductible options may have deductibles from 1,000-2,000 bucks.  These plans are the least expensive, but require the most financial planning on your part.  You can open a Health Savings Account, to help you with meeting these out-of-pocket expenses.  The money you put into these accounts are pre-tax, which means you pay no income tax on the money set aside in your HSA.

The downside is you have less flexibility with this money, compared to money in a normal savings account.  The money in a health savings account, can only be spent on health related expenses.  These would include deductibles, c0-pays, medications, dental and vision expenses and other health related items.

If you have a large amount of money build up  in that account over time, then there are times the money can be spent on college costs and other limited categories.  You must check with a CPA or other expert to make sure you follow the rules or there may be un-expected taxes and penalties.

Most people with a HSA have an amount of money taken out of each paycheck.  It is important to have an emergency fund to handle the unexpected medical expenses that may occur while you build up your HSA account to a point that it can handle all your expenses.  Most large banks and brokerage firms can help you set up a HSA. 

Your benefits manager should also be able to answer specific questions.

So what is the right choice?   The HMO is usually the cheapest option.  If you co-workers that use the HMO are satisfied, and especially if you are young and healthy, then this is a good choice.  But remember, with a HMO you go to the Doctor or medical provider of their choice, not yours.  The limitations do allow this option to be cheaper.

The PPO, for a little extra money, gives you more flexibility in your choices of physicians.  If you have a favorite physician, that is already a member of  your plan, and especially if you have a chronic illness, you may prefer to pay a little more for this option.

If you have emergency savings, and you want to save money and taxes, then the Health Savings Accounts are probably a great option.  Just remember the importance of setting aside money monthly, and allow the account time to build up to enough to handle your usual medical expenses.  Over time, this tax advantaged account can  grow to a substantial nest egg.  The closer you get to retirement the more flexible the rules are on what you can spend this money on.

So, make sure you read and understand all your options regarding your health insurance during this time of open enrollment.  The most important issue, is the thought and planning so you make the correct decision.  You may have to stay with your choice until next years open enrollment.

One choice you shouldn’t make is to not have health insurance.  One of the most common causes of bankruptcy is an unexpected illness or injury, which these days can cost into the hundreds of thousands of dollars in expenses.

 If you have questions or comments about your choices and options, please leave us a comment.

Also remember I have a free ebook ”Emergency Money Resuscitation” available at my website, www.themillionairenurse.com .

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