Insurance & Wealth Building

Learn why you must adequately insure your property, yourself–and your family so that you can build wealth more effectively regardless of where you reside…

 

It is very important that those who desire to build wealth in an efficient and highly effective manner reduce or minimize their risks to the lowest level possible based on their financial ability to do so.

 

At this time you may want to consider all areas of your life in which you need or should have insurance coverage –including other individuals and family members that you have an insurable interest in or others who may have an insurable interest in you.

 

Insurance provides you the needed vehicle to help protect your property, health, life and other areas of concern for you and your family so that you don’t have to borrow and go into further debt, tap into your savings and other accounts or liquidate your assets due to an untimely or unplanned event occurring.

 

In this discussion TheWealthIncreaser.com will show you why it is imperative that you understand the areas of insurance that may be applicable to you so that you can more effectively move toward making your dreams come true.

 

It is very important that you have insurance at the appropriate levels in all areas that could be of benefit to you and your family!

 

Property Insurance

Auto–Boat–Home–Motorcycle–Riders etc.

Auto–insurance for your auto is a requirement in most states and countries and you must normally carry minimum limits of liability–and in some states and countries property damage coverage as well.

Boat–if your boat engine is 50 HP or less your HO coverage may be appropriate–for greater HP you need a specific boat policy.  Each state in the U.S. have their own requirements when it comes to boat insurance.

 

In most cases boat insurance is a worthwhile investment as it can cover you from a number of perils–including theft up to higher limits than your home owners policy.

Homeowners or Hazard Insurance–you must have coverage for your home and the contents that are inside your home.  In most cases it is best to avoid percentage deductibles as it can end up costing you more in the event of an untimely event.

Percentage deductibles may exceed your normal deduction and may not be in your best interest as it can possibly cost you more when you have a need to file a claim.

Flood insurance is also worth consideration as it can be a cost saving coverage–especially if your home is located in a designated flood zone.

Motorcycles–you may need a separate policy in most states and countries.

Riders are additional insurance that provides coverage for specific items or perils.  Paintings, expensive jewelry and the like may require that you pay an additional premium to get additional coverage.

 

Title Insurance

Lender’s Policy

Lenders will require that you purchase a policy to protect their interests when you get a home loan.  The purchase of a policy to cover you and your family is optional but highly recommended as it can help protect you from title issues from the day of purchase and well into the future–up to the policy limits.

Buyer’s Policy

As mentioned above the purchase of a buyer’s policy at closing is normally optional but highly recommended if you are a home buyer.

Keep in mind that there are limitations on the policy as it will normally only provide coverage for the purchase price–not appreciation of your home that may occur in future years.

 

Business Insurance

If you have a business including an office in the home where you meet clients–you more than likely will have a need for coverage.  Depending on your business–coverage on key employees may be a wise investment as well.

Errors and Omissions insurance may be required if you are a professional and that coverage can protect your company, your workers, and other professionals against claims of inadequate work or negligent actions.

 

Disability Insurance

If you become disabled–you want income replacement of at least 60% and a disability policy may be appropriate depending on your current financial position and ability to pay.

 

Health Insurance

It is imperative that you have health insurance, including dental, vision, hearing etcetera–where appropriate.

 

Liability Insurance

If you own a business make sure you are bonded & insured when appropriate.  If you have a high net worth or you are a high income earner make sure you have an umbrella policy.

 

Umbrella policies are a life saver for those who have a real need for coverage as it can help prevent you from coming out of pocket to settle large liability claims that could adversely affect your net worth.

 

Life Insurance

A major area of insurance that you want to get right at the earliest time possible is the coverage for your life–whether term insurance, whole life or a combination.

 

Whether term or whole life you want to insure that you and your family are covered at the appropriate level based on your financial position at this time.

 

Long-Term Care Insurance

With long-term-care costs rising yearly it is important that you have the appropriate coverage or a plan in place that allows you to pay monthly payments for long-term care from your personal savings.

 

Mortgage Insurance

MIP

Mortgage Insurance Premiums, commonly known as MIP is insurance for an FHA government loan that provides protection against the risk of loss to lender due to low down payment requirements of an FHA loan.

PMI

Private Mortgage Insurance, commonly known as PMI is insurance for a conventional loan that provides protection to lender against the risk of loss due to low down payment (less than 20% down).

VA Funding Fee

VA funding fee allows lenders to provide loans at little to no down payment for veterans–and at its core is protection for lenders who offer VA loans.

In some cases the above insurance fees will be held in escrow and you would include the fee in your monthly mortgage payment.

Mortgage Life Insurance will pay off your mortgage in the event of your untimely death or possibly inability to work and the premiums are often high compared to other insurance products.  They are often promoted by lending companies, life insurance companies and other financial providers.

 

Rental Insurance

Provides protection against property that you own while renting a premise up to policy limits–therefore you won’t have to come out of pocket to replace the covered items.

 

Rental insurance could be coverage for contents in your apartment, a rental house or other covered property.

 

Self Insurance

Self-insurance is the ideal position to be in as it allows you the ability to provide insurance to yourself and possibly family members and it is a lofty goal.  Your net worth is effectively so high that you don’t have a need for life insurance or possibly other insurance products.

 

Be sure to use caution with this approach as subjectively thinking you can self-insure may lead to you not having the coverage that you need.  Use this approach wisely and consult with a number of financial professionals if you anticipate using this strategy.

 

Even if you can self-insure–carrying insurance in a number of areas (particularly life insurance) can be a part of a well thought out estate planning strategy–if done right.

 

Umbrella Insurance

Provides additional liability coverage on top of what you may have in your home and auto policies, therefore preventing or reducing the likelihood that you will have to tap into your personal assets if you are liable after a lawsuit is filed against you or your household.

 

Other Insurance

Burial, insurance that covers your mortgage, accidental and other products are on the market and they are often heavily marketed to target audiences.

 

In most cases the premiums are high compared to the payout and you may have better options, therefore it is important that you shop for your insurance needs in an appropriate manner and in a competitive manner based on your needs, desires. and ability to pay on a consistent basis.

 

A number of companies–and most notorious Lloyd’s of London will insure just about anything including what you may think is not insurable.

 

If you have something or someone that you need to insure and traditional insurers don’t cover–consider going outside the box–so to speak–to find the coverage that you need when and where applicable.

 

Dismemberment, accidental injury and other policies that insurer’s come up with are available and you must do a careful, critical and analytical review of whether those insurance products are right for you.  By doing so you can stay on a more positive path toward making your dreams come true.

 

Or another way of looking at it is–will these products benefit me and my family the most or the insurer the most?

 

Conclusion

 

You must proactively analyze all areas of insurance to determine if you need coverage in areas that are applicable to you and then search the marketplace to find the best insurance products that fit your needs and goals.

 

It is imperative that you select a highly rated insurance company that on the surface looks like it will be around well into the future as you want a solvent company that is well managed and can pay out benefits well into the future.

 

By introspectively contemplating your need or requirement for insurance in all areas of your life that is applicable to you and your loved ones, you can position yourself for a lifetime of success and reduce the risks that you face–thereby putting you on a a more solid pace–to win your financial race.

 

Also realize that a properly funded emergency fund is a form of insurance (although not in the traditional sense) and can help you avoid using your insurance policy for minor occurrences (thereby increasing your premiums) and can help prevent you from tapping into your retirement and other accounts, thereby “insuring” a more prosperous future for you and your family.

 

You can now reduce the anxiety in your life by utilizing insurance appropriately so that you can avoid financial strife.

 

Isn’t it time you decide to give it your best!

 

All the best to your insurance and financial success as you now should expect nothing less…

 

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Housing Related Insurance & Wealth Building

Learn how Housing Related Insurance  can help you attain your Wealth Building Goals…

More on Insurance…

With the hurricane season in full force and hurricanes Harvey and Irma doing major damage to many southern states in the United States and the Carribean Islands–TheWealthIncreaser.com was inspired to create this page to possibly help you and others proactively guard against man-made and natural catastrophes that might occur during your period of home ownership that could cause undue hardship on your life and particularly your wealth building efforts.

 

Insurance basically protects you in the event of a covered loss and the following insurance types related to your home can help protect you from loss and help you continue to build wealth effectively and efficiently!

 

Even though ideally you want to be in position to never have to use insurance—you must put together a plan to have the insurance that you need (or is required) during the period in your life that you need it.  Some insurance is required if you have a mortgage or home loan (hazard insurance) and some insurance is optional (at your discretion), therefore be sure to take this discussion to heart and analyze your current insurance needs in a comprehensive way.

 

PMI or MIP

 

If you purchase your home and you put less than 20% down you may have to pay PMI or MIP if a government backed loan is obtained.  That additional premium is basically included to protect lenders in the event of your default on the loan (non-payment).  If you put 20% or more down their risk is reduced in their eyes to an acceptable level and you would not have to pay PMI or MIP.

 

Although you pay the insurance premium monthly, the payment is for the protection of the lender–not you–and works against your wealth building goals.  Ideally you want to purchase your home without mortgage insurance so that you can build wealth more efficiently.

 

You benefit by paying PMI/MIP primarily by having to come out of pocket with a low down payment such as 3.5% or 5% instead of 20% or more that allows you to avoid this premium. 

 

If you have PMI or MIP you may be able to refinance it out if it makes good financial sense to do so.  Otherwise your PMI or MIP payment will remain until you reach a certain equity position with your home and loan or the half-way point of the loan in almost all cases (refer to your closing documents for more specifics).   If you plan on selling your home–that is also a way out assuming you don’t repeat the cycle with your next purchase (you put 20% or more down on your next purchase).

 

The good news is that you can deduct MIP/PMI, along with mortgage interest, points and property taxes on your federal and possibly state tax returns (who knows how long that will last).  PMI/MIP can be financed into your monthly payments or paid by you in a lump sum at closing–and if you paid at closing you would not see the premium in your monthly payment.

 

Title Insurance

 

Another type of insurance that is not well known by many is Title Insurance.  Title Insurance protects your interest in your home from a “chain of title” perspective and is usually required by the lender at the time of closing and is optional for the home buyer.  It is highly recommended that you purchase this insurance to protect your interest in the chain of title as there is no way for you to realistically know with certainty who owned the home or land prior to your purchase.

 

Although title issues after closing are rare they do occur and for several hundred dollars you can purchase Title Insurance at closing or outside of closing and protect your home from title issues up to the purchase price in most states.

 

Homeowners (Hazard) Insurance

 

Homeowner Insurance is required if you have a loan on your house.  If you own your home free and clear Homeowner’s Insurance is optional but highly recommended unless you have a net worth that allows you to effectively “self-insure” your home and still meet the goals that you have during your lifetime and after you transition.

 

A standard homeowner policy allows you to add on (riders) that cover additional perils that you may face such as a loss from the theft of a valuable stamp collection, a million dollar painting, expensive jewelry and the like.  You can add an umbrella insurance policy that can provide you additional coverage related to certain events that may occur and you can add flood insurance on as well–and they will both be covered  in this discussion.

 

Umbrella Insurance

 

An umbrella insurance policy protects you against unforeseen losses as a result of accidents and provide additional coverage so that you won’t have to tap into your savings or other accounts to cover certain claims against you.   An umbrella policy is designed to help protect you and your family from major claims and lawsuits.

 

For several hundred dollars a year you can get additional coverage (up to a million dollars or more) that provides  liability coverage above the limits of your homeowners, auto, and boat insurance policies.

 

Flood Insurance

 

If you live in a designated flood zone  be sure to purchase flood insurance.  The cost usually is several hundred dollars per year up to several thousand dollars per year depending on where you live and the topography of the land in the area where your home and community exists.

 

It can even be a wise move to purchase flood insurance even if you live outside of a designated flood zone as weather patterns are becoming more unpredictable.  You can purchase directly from your insurer (some insurer’s have their own program) and the government also has a program (National Flood Insurance Program) that can also be purchased from your insurer–never directly from the government.

 

After a flood you must be aware of potential mold issues and other environmental concerns as the potential for serious health hazards may be present.

  

Renter’s (Tenant) Insurance

 

A rental insurance policy normally covers the policyholder (tenant) from certain losses that occur in their rental home or apartment and is usually for contents and not the structure.

 

If you were a property owner leasing out your home or apartment unit you would need to get a policy to cover the home or apartment unit.

 

The tenant would be the one who would purchase the rental insurance policy otherwise they could sustain total loss of their contents if a theft, burglary, fire, flood or other event occurred.  In many cases a standard  renter’s policy would cover the loss.  Be sure to consider additional riders to cover valuables or what is not covered in the standard policy that you may need–or desire coverage for!

 

Business Insurance

 

Although this discussion is primarily focused on home owners TheWealthIncreaser.com realizes that many homeowners also own a business.  If you own a business be sure that you have appropriate coverage based on the type of business and the risks involved.

 

Credit Life & Life Insurance

 

Many vendors offer credit life insurance policies that will pay off your mortgage in the event of your untimely death, injury or disability.  The premiums are usually quite high for the coverage amount.

 

Other options are whole life policies and term insurance policies that would pay your designated beneficiaries in the event of your untimely death.

 

If you chose your coverage amounts appropriately your beneficiary(s) could be in position after your transition to pay off the mortgage loan balance and own your home free and clear–and have proceeds to do other things that you may desire that they do after your transition,

 

Conclusion

 

Keep in mind that insurance is available to cover almost any hazard imaginable and there are mega insurance companies such as “Lloyds of London” that will insure almost anything (or anyone) imaginable and your desired coverage amount is available at varying premiums.

 

As far as your home owners policy goes, be sure to get adequate coverage to rebuild at current building costs.  Always consider your need for additional coverage and you must understand what is and is not covered.  Pay particular attention to “percentage deductibles” and other jargon that may limit the coverage amount on your loss.

 

For an additional premium you can add “riders or special endorsements” to your policy that will cover other perils not directly stated in the standard policy.   Be sure to consider additional riders that may be of benefit to you and your family prior to (DO A REVIEW AT THIS TIME) a catastrophe or other unplanned event occurring.

 

After a natural disaster or catastrophe grants and/or loans (FEMA/SBA) may be available after you exhaust your insurance and they may require a credit evaluation and a look (review of your past payment history) at your ability to repay.

 

Emergency grants may be made available to you immediately depending on the nature and severity of the catastrophe and you may be eligible for those regardless of your income or current credit readiness!

 

Insurance is an area of financial planning and wealth building that must be approached in a serious and analytical manner and in an all-consuming or comprehensive manner so that you can achieve the goals that you desire.  You must understand fully at this time that in some areas of insurance (i.e. homeowner’s insurance policy and auto insurance policy for sure and possibly other areas as well)–insurer’s take your credit standing into consideration when determining the rate that you will pay.

 

The good news is that you can request that they lower your rates if you have bad credit and you make improvements.  However, if you fail to request that they re-analyze your insurance rate after you  improve your credit–your credit improvement will go unnoticed by your current insurer(s)–and in almost all cases your rate will remain the same!

 

Always remember (even at a time of disaster) that if your local, state and/or federal agencies declare your area a disaster area  or issue a state of emergency you may have additional options available such as including some of your losses on your tax returns as a casualty loss (can possibly amend prior year return to get proceeds in a more timely manner) or filing a claim for spoilage of food from your freezer or file a claim for debri removal  if caused by a power outage or wind–without having to meet your deductible–depending on your state and the details of your policy.

 

In addition, if you have a Fannie Mae or Freddie Mac backed mortgage loan (which is a high probability) and you suffered damage as a result of a catastrophe in a federally declared disaster area–you may be able to suspend your mortgage payment for up to 12 months.  Even if you have another type of loan it may be wise to review your closing documents or have an attorney help you sort it out to see if you can avoid paying penalty free on your loan for a period of time.

 

Try to get your bank and other companies that you have financial relationships (Automated Teller Machines, utilities payments, insurance payments etc.) with to waive your penalties for a period of time if you find making payments difficult after a disaster.

 

Whether you are now recovering from hurricanes Harvey or Irma or facing adversity on other fronts TheWealthIncreaser.com would like to leave you with some encouraging words.

 

Ironically this site was created due to a weather related incident and it is important that you use your imagination and have your antennae up for inspiration that may come your way in times that appear to be difficult at the moment and in actuality are difficult at the moment.

 

During times such as those the birthplace of big ideas can be found for those who are looking–and ready to act!

 

It is also important that you use HUMOR as a major tool to help you cope in times of adversity as by doing so you keep your spirits in “upbeat mode” so that your mind can act in a more appropriate manner during difficult times.

 

It is the desire of TheWealthIncreaser.com that this discussion has helped you get started on a path to analyzing your insurance needs in a more comprehensive manner and has put you on a path to achieving more during your lifetime without the added stress of unexpected and costly losses and experiencing the dark and empty feeling of not knowing the steps that you can (or need to) take to make your journey toward success much more favorable for you and your family.

 

All the best to your Insurance Coverage & Wealth Building Success…

 

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Credit & Insurance

 

Other helpful sites that may be of benefit in time of disaster:

 

RedCross.org

 

Salvation Army

 

National Housing Conference

 

Frequently Asked Questions About Flood Insurance

 

Flood Insurance Website

 

National Flood Insurance Program

 

EPA.gov

 

FEMA.gov

 

SBA.gov

 

CharityNavigator.org

 

Guidestar.org

 

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