Saving You Money For Life

This suggestion comes from an article published in Harpers Magazine and written by Dean Baker. He suggests that one way to reduce auto emissions and contribute to slowing the greenhouse effect is to change the format for auto insurance.

People’s gasoline consumption habits would change if we switched from the current way in which people pay for auto insurance to a pay-by-the-mile system. “Such a switch might reduce annual gasoline consumption by as much as 10 percent, without raising the cost of insurance for an average driver. The key is to change the way that people view the cost of driving their car.”

Currently, auto insurance is a fixed expense. People pay the same amount for their insurance no matter how much they drive. Because it is an ongoing expense, it is never factored in when the commuter ponders the choice between public transportation and driving alone.

More after the jump…

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Permanent insurance is often portrayed negatively when in fact it’s a great product….but only when you can afford it and the average American cannot. For example, a 40 year old male, non smoker in healthy condition can get a 20 year level term policy with a death benefit of $500,000 for $365 a year. A whole life product would cost him about $7,000 a year.

Most financial advisors will advise their clients to buy a term policy. Why would they do this if permanent policies are so good? Because 9 out of 10 times the client will pay the first year and then lapse the policy. And the #1 goal of life insurance is to protect the family should the breadwinner die.

It doesn’t matter how great a permanent policy might be…because in the end, if you can’t afford it it’s not going to work for you.

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Following a fire in its plants last year, Taipei, Taiwan-based semiconductor test and assembly services provider Advanced Semiconductor Engineering (ASE) Inc. reported Wednesday that it reached a final settlement amount with the nine insurers under its Fire Insurance Policy that acted as co-insurers. The fire occurred in ASE’s Taiwanese plants on May 1, 2005.

After subtracting the deductible amount from the total insured loss as provided for under the Fire Insurance Policy, the final settlement amount is $247 million (8.1 billion Taiwanese dollars). The insurers already paid ASE an interim payment in the amount of $70.6 million in mid-October 2005, which will be deducted from the final settlement amount.

In their final payment the insurers will pay ASE $177.1 million in accordance with the provisions of the fire insurance policy. With the settlement amount finalized, ASE expects to recognize approximately $104.4 million of non-operating income in its Q2.

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The method companies use to determine rate classes is the same…a paramed exam with blood and urine samples that are analyzed for high cholesterol, blood pressure, diabetes, etc. And, the rate classes are the same: standard, preferred, preferred plus. But each company has a different interpretation of what might fall under standard or preferred.

When it comes to things like certain conditions such as high blood pressure or cholestoral, one carrier might be a little more lenient than the other which can result in putting you in a lower rate class. This could cost you thousands of dollars over the lifetime of the policy.

So what can you do? Shop around. Visit a broker that deals with multiple carriers and knows how each one classifies certain medical conditions.

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A Texas life insurance company has agreed to a $70 million settlement of multi-state and federal charges that its sales agents duped 55,000 soldiers into buying life insurance. The Securities and Exchange Commission says agents for American Amicable Insurance Co. conned soldiers into believing they “could become millionaires” by investing in the company’s “Horizon Life” accounts.

“This is not a case of a few rogue agents, but of a centralized, company-sponsored marketing system that pitched an investment and had the effect of deceiving thousands of American military personnel,” in the words of SEC officer Helane Morrison. Because soldiers already get insurance from the federal government, American Amicable dressed up its policies as investments that would generate $1 million over 20 years.

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Life insurance rates can vary dramatically from company to company. When shopping around for life insurance, be sure to use a brokerage – a firm that deals with multiple life insurance companies. Why? Well, let’s say you’re a 40 year old male, non smoker looking for a $500,000 20 year level term policy.

Now, let’s say an agent from company A showed up at your doorstep. He says he can get you term life insurance for $990 a year. Over 20 years, you’ll pay $19,800. If you shopped around, you’ll find that there are other policies that are the same for about $355 a year. Over 20 years you’ll pay $7,100. That’s $12,700 less!

The message is clear – shop around before committing to a policy. These more expensive policies are sold all the time. Remember – it only takes five minutes to go on the Internet and look for prices.

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As part of a consent agreement with the California Department of Managed Health Care, HMO giant Kaiser Permanente will pay $5 million in fines and charity payments for the incredible foul-ups it instituted in its kidney-transplant program.

Kaiser had a successful history of referring its Northern California members to University of California hospitals for kidney transplants. However in 2004 Kaiser decided to bring those transplants in-house. As part of the bureaucratic shift, patients were forced to abandon waiting lists at other facilities and join Kaiser’s very own. What resulted was patient stonewalling and inexplicable delays – which resulted in twice as many deaths among the patients on Kaiser’s list as there is statewide among all hospitals.

Along with paying the fine, Kaiser has gotten out of the kidney transplant business and is re-transferring the remaining patients back to other hospitals. What has not happened at Kaiser is a single layoff among its staff resulting from this massive display of incompetence. Given the highly publicized problems Kaiser has had with foul-ups in its hospitals, one has to wonder if there is any concern for accountability within this managed care monolith. It seems that the minimal number of options available for full service healthcare today gives organizations like Kaiser the comfort zone of a monopoly.

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Annual renewable term (ART) life insurance is insurance that provides coverage for a one-year period. At the end of the year, you can renew the ART policies without having to provide evidence of insurability, up to a specified age or within a specified period.

However, ART policies are designed for short-term needs and premiums increase dramatically each year when you renew. The premium is based on your age at the time of renewal. So if you need coverage longer than a year, you may want to consider a level term life insurance policy. A level term policy will allow you to lock in a rate that will stay level for the legnth of the policy term (10, 20 or 30 years).

Most ART policies offer the option to convert to a cash value policy for the same or lesser amount of coverage without having to provide evidence of insurability. Keep in mind that this conversion option is only available after a specified number of years or before a certain age.

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I thought this might be helpful to those looking for insurance deals. In the November issue of Kiplinger’s you can find a list of websites that they say will allow you to find the best deals on life, health, auto, homeowners and long-term care.

Disclosure: AccuQuote was named one of the best sites for life insurance.

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Western-Southern Life Insurance Co. recently notified thousands of African-American policyholders that they may be eligible for additional policy benefits because they were charged higher premiums based on their race. The notification follows an August 2005 consent order negotiated and signed by the Ohio Department of Insurance related to allegations the company and numerous subsidiaries charged some African-Americans higher premiums because of their race.

Under the deal, the insurance unit of Cincinnati-based Western & Southern Financial Group Inc. did not admit any wrongdoing but agreed to increase benefits of more than 56,000 eligible policies by $25 each. If a minimum of $2 million in additional benefits isn’t claimed, the difference will be donated to educational institutions or charities. Net result: the price of doing no wrong was, in the eyes of the court, two million dollars.

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