Hence, in most aspects of capitalism, people try to profit from others in any way they can.
However, not all aspects are win-win. If same shops sell the same product at a different price, of course, you'll pick the cheaper package. In this case, picking a package that makes the shop profit more will tend to hurt you.
The same thing works for insurance. A good rule of thumb on whether an insurance package is good for you or not is whether the insurance program makes a lot of money doing it or not.
No, I am not advocating that such huge profit should be prohibited. To the opposite, when an insurance company makes a lot of money, then they'll invite competitors that'll shift their profit back to you. Free market is still the best in this area. I am advocating that you don't buy such insurances.
The same way, I am not advocating that merchants shouldn't make a lot of money selling their products to you. I am advocating that you should buy from the business providing the best product, and service, at the least costs. That's how capitalism works.
The following are insurance programs where insurance companies make a lot of money. Hence, avoid these programs like plague.
The safest way to travel is by airplane. There is a statistic that says that if you travel by airplane every day for 1000 years, you'll probably get a plane crash once. Even then, you'll survive. However, plane incidents are always reported on TV. That causes fear. Humans act based on emotions and feel that flights are much less safe. Not only that, you also have life insurance covering your life.
Mortgage Life Insurance
I have found out that you're better off buying term life insurance. Again, in general, insurances that are mixed with something else, like mortgage, or savings, are usually bad ideas. The more things are mixed, the more consumers are confused. The more confused the consumer, the more money insurance companies make.
Credit Card Lost Prevention Insurance
By law, your lost is limited to $50. So don't buy.
Accidental Death Insurance
Stick to regular good old term insurance. The probability that you'll die due to accident is lower than you think.
Rental Car Insurance
This is also another rip off. Insurance companies make too much from this. Chances are, it's already covered with your regular car insurance. Think of it this way, you use your car for a whole year. If you rent a car for 1 day, then the probability that you will have a car accident within that 1 day should be around 1/365 of your regular car insurance. However, rental car insurance is sold at much higher price than that.
"Mommy, our kids are dead, I am so sad. But fortunately, we got them insured. So we got cash." There are only two ways why you should buy children insurance. First if your child is the bread earner of the family. Second if you plan to hack them into pieces. I'll explain more why when we understand the true nature of insurance on http://FasterFinancialFreedom.com/art.390.0.html.
Identity Theft Insurance
The hassle of going through claiming the insurance coverage is better spent on checking your free credit report.
Insurance, Risk, and Investments
Every time you put $1 in an insurance, you'll probably get $.50. The other $.50 goes to the insurance companies and to their seller. Most of the time, the ratio is even higher.
For example, say you buy term insurance for $1 million. Say you paid $2000/year for that kind of insurance. Then I bet, the insurance companies know all along that the probability you're going to die that year is only 1%. Hence, the insurance companies make $2 for every $1 they pay in claims.
The more complicated the insurance, the larger the ratio. In permanent insurance, for example, insurance companies probably make $5 every $1 they pay.
You can't win in insurance by buying more insurance. Your true gain doesn't come from the higher expected value of your return. Your gain comes from increased stability of your business. Say you have a lot of houses that's all in the bank. Say one of them is on fire. Then a $100,000 lost can cost you way more than $100,000. Perhaps it'll force you to fire sale your other houses at cheap price. You see how financial instability can knock you out of business? Insurance addresses this.
Also, with insurance, your income from year to year becomes smooth. Women like stable income. IRS are more lenient towards stable income too. You'll pay less tax if you earn $50,000 per year for 10 consecutive years than if you earn $100,000 per year for 8 years and lost $150,000 per year the next 2 years. The former case will put you on lower income tax bracket and relieve you from paying the tax on the extra $50,000/year that you're going to lose.
So what are the tips?
Do not over Insure
Remember, the benefit of insurance is stabilizing your income. If you over insure, your income will be instable again because you'll actually make more money if your house is on fire than if it stays in charge.
Now, some people love to over insure. The only time this can be profitable is if you plan to burn your house. This is illegal, however. Insurance companies understand that those who are over insured are less likely to guard his house well, observe fire codes, and so on. So, they charge much higher premiums.
Keep the Co-payment Threshold High
In many insurances, you pay the first $10,000. The insurance pay in addition to that cost. Say you wreck your car. Say the cost is $5,000. You pay for it. However, if the cost is $100,000, then you pay the $10,000 of the cost, and the insurance pays $90,000.
Why is the co-payment high? First, insurance claiming is not easy. There's a lot of fraud going on and there's a lot of administrative processes that need to be done. If the insurance company puts the administrative cost to the claimant, they'll lose customers.
"Oh I lost my house, but I have to cough up even more money to get money from my insurance." Only governments can do such cruelty and stay in business.
So what do insurance companies do? They put the administrative cost in the premium.
So the premium becomes high. After all, if your loss is small, why not just pay for it? Saving the lesser premium in investments will be more than enough to pay small losses without losing your financial stability.
It's also never a good idea to file a claim for small losses. Filing such claims will make insurance companies mark you as a high risk. Hence, they'll raise the premium even more.
Sell Life Insurance Policy
The problem with term life insurance is you receive it after you're dead. Well, sometimes you can get your money before you die. That process is called viatical settlement. It'll only work for those whho are terminally ill. So an investor pays a reduced version of the coverage. After you die, the investor gets the coverage from the insurance company.
Jim Thio is a silver medalist in International Physics Olympiad. He uses his Math skills to provide free financial, business, and marketing advices in http://FasterFinancialFreedom.com/art.390.0.html
Article Source: http://www.articlesbase.com/finance-articles/picking-the-right-insurance-program-17189.html
You see, there isnt just one kind of life insurance policy available. Purchasing a life insurance policy can be much different from purchasing, say, an auto insurance policy in which case you can decide on purchasing simple liability coverage, or full coverage, and a high enough amount of auto insurance to cover damages resulting from everything from car accidents to theft.
With life insurance policies, while there are also two main kinds term life insurance policies and whole life insurance policies the two are very different in what kind of coverage and extra benefits they offer. Term life insurance policies cover you for a certain period of time, while whole life insurance policies cover you for the duration of your life and thats just the tip of the iceberg when it comes to the differences between term life insurance policies and whole life insurance policies.
The bottom line is, once youre ready to choose the kind of life insurance policy you want to purchase, youre probably going to need some advice.
There are a few ways to get good advice when it comes to purchasing a life insurance policy. First, do some research on both term and life insurance. Find out exactly what each kind of policy offers and make notes.
Next, talk to friends and family members about which kinds of life insurance policies theyve purchased. Theyll tell you what works for them and why, and this will help you determine what might work for you.
Finally, talk with insurance agents who specialize in selling both types of policies. Agents are trained professionals who can offer advice based on the coverage you need.
"The insured is our enemy, depreciation is our friend." This phrase was written on the blackboard by a student on the first day of one of my classes at the most prestigious insurance school in the country. The instructor erased everything at the end of every day, except that phrase. Too many honest and unsuspecting insurance holders with legitimate claims have found that their insurance company doesn't want to pay out when the time comes - and most, though they may try to fight the insurance company, end up with the short end of the stick. After all, insurance companies are out to make money, and sometimes, the bottom line means that they will try to deny a legitimate claim. Even if you have "good insurance", you should still use caution when involved in a dispute over a claim.
As a public adjuster, the number one complaint I hear from policy holders with a claims dispute is, "the adjuster lied to us." What's my advice? Never believe what an insurance adjuster promises or tells you until you see it in writing or have it tape recorded. Plan as though you are being set up (because you may well be). An insurance agent's strategy is often to delay giving you any "bad news" until he has his own file documented.
Keeping a written record is crucial. Pay close attention to adjusters, especially in the beginning while you build your file. Get everything in writing and fax your letters. Even a hand written note on notebook paper is better than nothing. Now there is a record and the adjuster is legally bound to answer your questions or concerns.
In California, an adjuster has 14 days to respond. Most states have the same regulations. Do a Google search like "[your state] Fair or Unfair Claims Settlement Practices Regulations. You can also go to findlaw.com or your own state insurance department website). You can have your faxes sent to an office supply store and they will hold them for you. The bottom line? You are less likely to be cheated if the adjuster has to put his denial in writing.
When in the midst of a dispute, force yourself to screen your calls. Get an answering machine. Never pick up the phone until you know who it is. Never answer the phone when an adjuster calls, especially if you are expecting a big decision. Let him leave a message on your answering machine and copy the tape recording if it is important, such as a promise to do something. A clever adjuster may prefer to respond by calling you instead of putting it in writing. Now, you have a legal tape recording that can be used later to either bring pressure to bear during the claim, or as evidence in court. You can't tape him if you are on the phone unless you ask his permission first. I have never had an adjuster or supervisor agree to let me turn the recorder on. Adjusters don't mind tape recording you, but pull out a tape recorder or video camera when they show up to inspect your house and many will turn around and leave if you don't put it away. It is important to build a file in case you have to play hard ball later. Putting your requests in writing can also make an adjuster think twice before sticking it to you. In the words of my mentor, "Give an adjuster enough rope, and he will hang himself."
If you have an important conversation where the adjuster promises to do something and you fear he may not keep the promise or put it in writing, follow it up with a letter stating "Per our conversation on [date], you said ...". If the adjuster fails to respond, it can be construed in court that since he did not object, he must have made the promise.
These tips will help you in the event that an insurance company tries to deny your legitimate claim - which happens more often than you may think.
This article is an excerpt is from one of many insurance claim guides written by Ron Cercone and available at his official site, UClaim Insurance Claim Advice. Ron is also a contributor to the free information site Insurance Claim Help.
Article Source: http://EzineArticles.com/?expert=Ron_Cercone
You've poured over your policy wondering, "Will my insurance company pay for repairs?" Insurance policies are complicated and filled with jargon that's often difficult for the policyholder to understand. Even if you understood what the terms used actually mean, policies are also loaded with exceptions and exclusions. By the time you've read the policy from cover to cover, you're left with the same question - will they pay for it?
To further complicate matters, even if a loss is covered, the policy most likely includes a deductible as well as coverage limits. Depending on the nature of the loss, multiple insurance companies may be involved. For example, if a storm strikes and you have both wind and flood damage, you may have to file a claim with your homeowners insurance for the wind damage and another with the national flood insurance program (if you have flood insurance) for the water damage.
Depending on where you live, your deductible may be higher under certain circumstances. For example, in Florida, your deductible for hurricane damage is much higher than if your home was burglarized.
So, will your insurance company pay or won't they? Look at it this way, insurance companies DON'T want to pay. They are in business to generate profits and will need to be convinced BY YOU that the claim should be paid. The burden of proof lies on you, the homeowner. This means that you will need to prove your case and do it well. The better prepared and more organized you are, the better.
Start with documentation. You may need to take dozens of photos and provide your insurance agent with detailed estimates to counter against the insurance company's original settlement offer. You may need to demand to see how the agent depreciated your property and negotiate a more reasonable method. While your homeowner's insurance policy is a contract, the claims process does provide room for negotiations.
Your best bet is to be prepared for a fight. Your tools in this battle include a detailed home inventory, digital photos and video documenting the damage, estimates from local contractors, and a willingness to demand a better offer. You don't have to do this alone. In fact, many contractors are willing to be present during the insurance adjuster's visit to help point out damage that the adjuster might have otherwise ignored. In addition, public insurance adjusters act as advocates for the homeowner and work on your behalf to negotiate a higher settlement offer.
Arm yourself with knowledge, documentation, and real-world estimates while also considering professional representation and you'll be better equipped to answer the question, "Will they pay for it?"