Insurance Protection

[Will MaXimal]

Herro!

Offering my services to the board. My father was a State Farm agent for 30 years and my mother was a broker for 23 years. I have 7 years experience dealing with asset management and insurances. I have many clients from LA to Malibu to Burbank and Hollywood that have studios.

If anyone has questions regarding protecting their equipment or anything in general (home, auto, life..) please dont hesitate to ask!

If you live in California and would like a quote please dont hesitate to ask. I also maintain a license in Arizona.

[M!TCH]

I'm an idiot, didn't read the (home, auto, life...) section. I'd love to get some more info on the different types of life insurance policies and the pro's and con's. Feel free to comment on auto insurance ;) I have auto insurance through USAA at the moment. They've been great so far, however, I can definitely say that I should be more versed in what my policy states. Are there anythings that people should be watching out for in auto insurance policies as well?

[Will MaXimal]

I'm an idiot, didn't read the (home, auto, life...) section. I'd love to get some more info on the different types of life insurance policies and the pro's and con's. Feel free to comment on auto insurance ;) I have auto insurance through USAA at the moment. They've been great so far, however, I can definitely say that I should be more versed in what my policy states. Are there anythings that people should be watching out for in auto insurance policies as well?

Hey Mitch!

Life protection is the most important type of insurance you can buy. Anyone from age 18 - 90 can benefit from having some sort of plan in place. When it comes to choosing the right product, the only constant is this:

Buy Early = Save!

You have to go through underwriting when choosing a plan so naturally the older you are, the more expensive your premium will be. I urge people as young as 21 to buy term plans because at their age they can secure a quarter of a million benefit for as low as 21 dollars a month ($5 a week). So anyone that is thinking about learning more about Life Insurance needs to make sure they go talk to their agent or whoever so they can get something in the works ASAP.

As far as what type of plan to choose, that depends. There are three main types of coverage: Permanent, Term & Final Expense.

Permanent Life - Whole Life, Universal Life ect... These products are a combination of your death benefit and a savings account. These products were very popular many years ago as people could dump a bunch of money into their life insurance policy and using the magic of compound interest they would actually begin to make profits from them. The IRS finally put a stop to it so now there are heavy regulations regarding Permanent Life policies.

Pro's:

* Provides both living and death benefits
* Accumulates cash value
* You can borrow from your cash value like a bank... Whatever is not paid back at the time of death is deduted from the death benefit
* Considered a low risk investment, perfect for people that are not savy with investment products

Con's:

* Typically they can be very expensive which makes it hard for people on budgets to afford a plan
* Generally the cash value accumulation is far less if you had invested directly
* If not managed correctly, some permanent plans can self terminate (Universal Life)
* Many agents try and sell Whole Life over Term because their comissions are bigger

Term Life - Term Life is a fantastic product. Term Life is life protection where you choose the amount and length of time the policy is in force.

Pro's:

* Very affordable which gives everyone a chance to have a plan in place
* You can choose the length of time the policy runs
* Most policies can be renewed, some without underwriting and some you have the option of converting to a Permanent Life Plan.
* When planning financially, you can take the money you save by going Term Life instead of Permanent Life and have someone who knows about investing help you get more on your return than traditional Permanent Life Plans

Con's:

* No living benefits in the actual policy, its just a death benefit
* Although some products allow you to earn back the premium, with Term once the policy has ran its course thats it. You do not recieve any money back
* Some companies will make you go through underwriting to renew which may result in higher premiums

You also have Final Expense plans, 10,15,20 Pay Plans ect. which are other ways to go but i suggest speaking with your agent, financial advisor.


I personally am a big advocate of Term Life. I recently gave someone a quote for a Whole Life policy and the premium was like $260 a month. For the same death benefit, a 30 year Term Policy was about $31 a month. That $221 you can invest and get a nice return rather than just dumping it into a Permanent Life Policy. The catch is that you are responsible for doing your homework and finding the right company and product to invest with.

I have both State Farm & Primerica term policies on myself and my Fiance. I divided the difference and have multiple investment products through UBS, ING & Invesco and they are doing much better than what a Whole Life policy would have given me.

As young adults we aquire debt faster than we realize... There are student loans, credit cards, car payments and for some even mortgages. Everyone is born with another kind of special debt that looms over them... Its called pending funeral expenses which can exceed $10,000 faster than you realize. Many people are also self employed and have major overhead when first getting into business.

If you have kids then what about their future? Food, education, a roof over their heads, clothing and more.

If your spouse is a stay at home mom, what happens if the income earner is no longer around?

Here is the really crazy part:

Most people dont realize they can buy plans that cost as much as one premium cup of coffee a week, one pizza dinner for the family a month and less than a car payment the whole year.

I urge any single parents, anyone with any debt, anyone in a situation where the spouse stays at home with the kids, anyone with a mortgage or anyone that wants to start a plan while they are young so its cheap and that way as they age and eventually start a family, have a mortgage ect. will have the peace of mind knowing they have a plan in place... They SHOULD all have some sort of plan in place.

I have delivered many death claim checks and you would not believe the power behind having this insurance in place.

If you have any doubts, ask anyone that has had to go door to door fund raising for a funeral, ask a wife why they had to move out of their awesome house to a crappy apartment when their husband died and all the savings went out the toilet when the economy declined..

@ Mitch and everyone else, many view this insurance like their auto insurance... Just another expense. Its the most important piece of insurance you can have and again if you are curious just ask your local agent, financial advisor.

[jazzyj]

DaveRamsey.com - get term life insurance. save your money.

Will - do you (and if you know, does state farm) offer liability insurance for mobile DJ's?

Currently I go through RV Nuccio, only because my local agent just looked at me like I was crazy when I asked about liability coverage.

I'd prefer to go with a local agent, but unfortunately, I get the impression if there is no brick & mortar, they're not interested.

[Will MaXimal]

As Far As Auto Is Concerned...

Auto Insurance is one of those things that you get what you pay for. The first thing is you want to make sure that they are an Admitted Company... This means that they must follow the guidelines in which your States Department of Insurance has set forth. The Department of Insurance puts many provisions in place to make sure that rates are fair, companies honor claims and allow consumers to file complaints if need be.

In short, if you have an issue then the DOI has your back.

Non-Admitted companies tend to give people the run around almost always and really serve one purpose, allow you to drive your car legally.

Second thing is get a feel for the companies financial strength. This is especially important in areas with big populations, homeowners near large bodies of water and/or fire prone areas like brush, forest. The reason is some localized companies that arent as big as say Farmers, Progressive sometimes suffer high claim periods... Especially if there is a localized disaster like a fire, bad storm and/or flood. Farmers recently was under fire when the LA Forest caught fire about two years ago. There were so many smoke damage and structure claims that they were denying people coverage.

This leads to the obvious... Read the consumer reports and reviews. Its not just certain companies but certain brokerages and agencies might not be that great.

Lastly, as far as the policy itself goes you want to ask the agent a few questions like: Who is covered as an insured uner my policy? What happens if someone else drives my car? What happens when i drive someone elses car? Any special exclusions? What are the provisions of my uninsured motorist coverage?

This is the advice i give to clients when shopping around for Auto. You want to think about what scenarios you might personally face as a driver and make sure the coverages and benefits in that policy will cover those scenarios. Since everyone has different driving habits and different circumstances in which they or others will be operating their vehicles, you just need to make sure your agent knows all of this so they can tell you what coverages you need.

I have personaly not heard anything bad about USAA so I dont think you have anything to worry about with them. Non of my clients that have switched from them had anything negative to say either.

Again, just simply ask yourself if you were to custom make a policy for yourself... what would it cover? Also, for the amount of money you are paying see what additional benefits are offered.

State Farm has the Pocket Agent app that allows you to view and manage your accounts from your phone and other great features. You also get a dedicated agent with State Farm and a few other companies but for the most part any other companie if you call in you get some random person. With an agent you can build a relationship and get answers that stem from years of experience.

^ These are examples i share with people when shopping around.

If anyone has any specific questions regarding Auto or other policies please dont hesitate to ask. The insurance rules and guidelines might not be the same as here in CA and in Arizona but i will do my best to answer questions :)

[M!TCH]

You must spread some Reputation around before giving it to Will MaXimal again.

I will be rereading this a few times. Sounds like term is my cup of coffee anyways. At this point right now, I have been hesitant on getting life insurance I have not seen a need for it. No debt, no spouse, and my assets would cover a funeral no problem. I do like the concept of cheap though :D I'll be looking into this a bit more and hit you up if I have more questions, thanks!

[Will MaXimal]

DaveRamsey.com - get term life insurance. save your money.

Will - do you (and if you know, does state farm) offer liability insurance for mobile DJ's?

Currently I go through RV Nuccio, only because my local agent just looked at me like I was crazy when I asked about liability coverage.

I'd prefer to go with a local agent, but unfortunately, I get the impression if there is no brick & mortar, they're not interested.

Hey Jazzy!

Certain companies are very strict when it comes to their Commercial Lines Products. It will depend on how big your operation is and the services you are offering. The more extensive the services the greater the risk. When it comes to being a mobile DJ there are many risks involved... You have heavy equipment than can fall on someone or a child, cables people can trip on, lights and lasers that if not used properly can lead to a loss, damage/theft protection for equipment and I have even seen claims regarding hearing loss.

State Farm will not insure professional photographers because they are constantly in the field with cameras that can cost in excess of $10,000 or more. I am not sure what their stance is on a mobile DJ service but you should call and find out.

Generally some personal lines brokers can insure a mobile business but you will want to search for a commercial broker that protects against theft and liability. I had a policy with my mom when she was a broker about 8 years ago and i believe i was paying around 40 - 50 a month for my policy but i did not have much gear. My liability was at a million dollars though.

You might also want to check with whoever is insuring your home.. Some companies can actually attach special endorsements/riders on your existing homeowners policy that extends liability and personal property coverage. The coverage might not be as broad as a stand alone commercial policy but like i said depending on the size of your operation and what your needs are it might be enough for what you need.

I hope this helps :)

If you have any other questions please dont hesitate to ask... If you like Jazzy i can make a call and see if State Farm's Commercial Lines is accepting applications fo Mobile Dj's?

[jazzyj]

Hey Jazzy!



If you have any other questions please dont hesitate to ask... If you like Jazzy i can make a call and see if State Farm's Commercial Lines is accepting applications fo Mobile Dj's?

Actually State Farm covers everything we have - EXCEPT the mobile biz. I mean... if it's not a big deal for you to call, sure. As I said, I called my local state farm agent before and he was like no way jose. I do currently have liability (1.5mil) and equipment (10k i think) and I'm okay with it - just feels weird dealing with someone who does not have a presence in our state.

If you find out anything, I'd definitely appreciate it :)

[Will MaXimal]

I will be rereading this a few times. Sounds like term is my cup of coffee anyways. At this point right now, I have been hesitant on getting life insurance I have not seen a need for it. No debt, no spouse, and my assets would cover a funeral no problem. I do like the concept of cheap though :D I'll be looking into this a bit more and hit you up if I have more questions, thanks!

That is very good to hear! It's another good reason why people go with Term as it allows you to cover your income during the time you are in debt with say a mortgage but later on once you have accumulated wealth and own all of your assets out right in your later years then having life insurance is pointless unless you want someone to get paid if you die.

I did three quotes for you to show the difference in premium. Keep in mind, as you get older its not just higher costs but you actually stop qualifying for certain products.

Age 21 @ 100k (30 year term) - $23.75 a month
Age 31 @ 100k (30 year term) - $27.58 a month
Age 41 @ 100k (30 year term) - $40.20 a month
Age 51 @ 100k (30 year no longer available... Now 20 year) - $52.64 a month

Waiting to secure a plan will cost you so make sure you dont wait too long :D

Here again is a quote for Whole Life VS Term...

Whole Life @ $250,000 Benefit (Signed up at age 27) - $242.73
30 Yer Term @ $250,000 Benefit (Signed up at age 27) - $40.91

Difference - $201.82

If you were a young adult, single parent and/or new family starting out on a budget... Term makes life insurance possible :)

[Will MaXimal]

Actually State Farm covers everything we have - EXCEPT the mobile biz. I mean... if it's not a big deal for you to call, sure. As I said, I called my local state farm agent before and he was like no way jose. I do currently have liability (1.5mil) and equipment (10k i think) and I'm okay with it - just feels weird dealing with someone who does not have a presence in our state.

If you find out anything, I'd definitely appreciate it :)

I totally hear you, State Farm is notorious for being picky when it comes to Commercial policies. I will def. make a call for you my friend and I will let you know later this afternoon what I find.

As far as brokers go, you should be able to find a local broker with an office that you can go in and talk to someone. Apart from my office there are another two State Farm offices and probably 4 - 5 brokers in a one mile radius.

[M!TCH]

Will, thanks for the wealth of information. I need to sit down and seriously review all this stuff. I appreciate you looking into the Term versus Whole Life rates for me. I think once I start working full-time here shortly I'll be picking up a life insurance policy. I am averse to having debt, even a mortgage on a house (very well versed in financial leveraging so let's leave that topic out), but I think it is important for me to pick up term insurance assuming that in the future I would have dependents.

Would you mind commenting on motorcycles insurance? I remember for my R6 my rates were out the roof and have heard nothing but horror stories from people about the actual coverage the company will give you once you submit a claim.

[Will MaXimal]

Will, thanks for the wealth of information. I need to sit down and seriously review all this stuff. I appreciate you looking into the Term versus Whole Life rates for me. I think once I start working full-time here shortly I'll be picking up a life insurance policy. I am averse to having debt, even a mortgage on a house (very well versed in financial leveraging so let's leave that topic out), but I think it is important for me to pick up term insurance assuming that in the future I would have dependents.

Would you mind commenting on motorcycles insurance? I remember for my R6 my rates were out the roof and have heard nothing but horror stories from people about the actual coverage the company will give you once you submit a claim.

Hey Mitch,

Again its my pleasure! Insurance is certainly not sexy nor is ever really running through anyones minds other than cutting their renewal checks, but for the people that take the time to understand their coverage and plan ahead, these are the people that will never have an issue recovering their assets and keeping their households secure.

As far as motorcycle is concerned...

The best way i can answer that questions is this.. Insurance policies are essentially contracts you are entering into with the company you are insured by. When you are inquiring about a policy/coverage you must ask the questions i stated above and make sure you understand the policy and what it covers and what it excludes. Motorcycle policies are pretty much the same as auto policies in the way of coverages and exclusions.

When you say "have heard nothing but horror stories from people about the actual coverage the company will give you once you submit a claim".. I believe what you are talking about is the claims process in which the details of the claim are reviewed by the adjusters and in their investigation they are determening if the loss is a covered loss.

As a rider myself, being on motorcycle is very different from being behind the wheel of a private passenger vehicle. Often, depending on the conditions things happen faster while on a bike. Lesser raction times for emergency maneuvers, road debris... Loss of control and of course more open to the elements especially when it comes to possible injury. The insurance companies know this.

In short, this all ties into the credibility of a company and if they really have your back. You want to make sure you know the exclusions on the policy so you can hold them accountable for holding up their end of the policy contract although I have heard of companies bullying their own customers because they simply dont want to pay for the claim.

When it comes down to it though, whatever your limits are on the policy if you have a covered claim the insurance company cant back out of the contract, they have an obligation to cover the claim. If they ever try and bully you this way then contact the Department of Insurance and file a complaint, that always tends to help ;)

[M!TCH]

Will,

I am looking at picking up a new Subaru WRX STI in a few months. I have not changed my address :eek: on my insurance policy because they jack up my rates significantly. I'm assuming because I live downtown in the ball park area, which I understand from the standpoint of theft and what not. But, it pisses me off something fierce because my car is in a secured underground garage parking that is only available to tenants. I don't think my insurance company is taking that into account (either that or the accident rate in this area is phenomenal). Is this something that should be taken into account with my policy? I'm not going to stick with my current provider if they are not going to take this into account when I get my new car.

[Will MaXimal]

Will,

I am looking at picking up a new Subaru WRX STI in a few months. I have not changed my address :eek: on my insurance policy because they jack up my rates significantly. I'm assuming because I live downtown in the ball park area, which I understand from the standpoint of theft and what not. But, it pisses me off something fierce because my car is in a secured underground garage parking that is only available to tenants. I don't think my insurance company is taking that into account (either that or the accident rate in this area is phenomenal). Is this something that should be taken into account with my policy? I'm not going to stick with my current provider if they are not going to take this into account when I get my new car.

Hey Mitch,

You bring up a very valid point that all ties into modernizing the industry. In the beginning, people all paid the same rates even if they were in a city or on a farm 50 miles outside of one. Today, the industry is still changing but they are a long ways away from individual custom rates. Of course, when I say that I mean based on the kind of parking arrangements ect.

I get asked this all the time... "Will, i live in the city but my car is kept in a ________" Just replace the blank with (Garage, Gated Garage, Sub Level Parking, My Own Private Yard) and so on.

Crime is a problem, but statistics show that the real risk is during the day when everyone is out and about driving. So yes, its a great benefit for you to have secure parking.. But the insurance company is more concerned about those times when the general public are out and about during the day. Most people that work during the day will leave their secured parking garage and park their car in some shared lot with cars constantly coming and going.

This all ties back to the individual customized plan. Because there are so many people out there and so many variation of behaviors and habits, its not yet possible for us to offer a truly unique and personalized "per client" plan. We can offer something along those lines when it comes to the basics like long/short annual mileage and rates based on whole areas.. but when it comes to the super detailed, we simply lack the resources and information tracking abilities to pull it off.

Just remember, a tighter contract = double edged sword. If the insurance companies offer special contracts at super discounted rates, it will cause them to heavily regulate it. This will also mean that if you are taking advantage of a super discounted rate and something changes, you will have to notify the insurance company. You would be surprised how many people forget and those that say they forgot but just didnt want to lose their rate... For these people this could mean a claim being denied.

[M!TCH]

Ugh...I totally get it, that does make sense. I want a custom policy haha. I don't ever need to park in parking lots downtown because I...live downtown? My car rarely leaves my garage as I walk/public transportation to get anywhere I need to go. Thanks for the info, Will. Any idea on how I can get them to get my rates down? It is literally an $80 between a place 9 miles away and here. Just seems ridiculous.

[Will MaXimal]

Unfortunately, if you live in the city then you will pay the city rates. Having a sportier car with expensive replacement parts will also drive up premium.

You can shop around or see if they have a pleasure class that allows you to tell them you only use the car for pleasure and use other means for commuting to and from work like the bus and/or train

[M!TCH]

Will,

Just started looking into term insurance (I'm not sure perm is right for me as I do my investing already unless there are tax breaks I am unaware of). At 24, should I be looking for the longest term I can get for quite a sum of money? If I get 20 year term (if they offer that) for half a million is that a better choice than doing two 10 year terms one for a lower and one for a higher amount but the higher amount one being started when I am in my mid-thirties? I don't have any debt at the moment but based on what I'd like to do with my life want to make sure I have money for wife and kids (If I ever have any) if something were to happen. Perm is $$$ for just putting money into a savings account.

[M!TCH]

Will, bump for my questions above. In addition, can you expand on diminished value claims with regards to auto accidents?

[Will MaXimal]

Hey Mitch,

The idea with term insurance is to buy more at a younger age and when you are older... You should not need as much as most of your assets should be paid off and you should have built up a nice savings.

In that scenario I would say get a nice size policy with the max term.. say 30 years. Then after 20 years take out another 20 year term for less coverage that takes you near retirement. Hopefully by that time you will not need a policy because you have enough in savings to pay for final expenses and any lingering debt.

Of course can stagger the policy by reversing it... Taking out a twenty year term then by the end of it taking out a 30 year or another 20.

You are right in not going with a whole life policy. They are nothing more or less than a legal scam.

Diminished Value is tricky. We have it in California and its essentially a way to be reimbursed for the shortfall between your vehicles worth before and after an accident. You have to have the car looked at by a specialist and they determine the shortfall.

http://www.diminishedvalue.com/