integrity

This is what integrity means to me.

   How does integrity lead to winning in life & money.

http://www.youtube.com/watch?v=tq3CDttrG00&feature=youtube_gdata_player

How to get rid of credit card offers.

Want to know what I do with credit card offers I get in the mail? Check out this clip on YouTube and see.

http://www.youtube.com/watch?v=UjjrJJyT65I&feature=youtube_gdata_player

Insurance Part 6a: Life

Insurance

Part 6a: Life

By Keith Bunn Jr.

September 16, 2012

I have said it many times on Facebook, Twitter, and even on here that having Life Insurance is extremely important if someone counts on your income to survive!  And yet 30% of Americans don’t have it.

The purpose of Life Insurance is to replace income due to death. But the big question is, what kind do you get? The market is flooded with all kinds of different types of policies and it’s hard to figure out which ones are the good ones and which ones are bad. So let’s go over them.

Term vs. Cash Value

There are generally only two kinds of Life Insurance policies out on the market today, Term Insurance and Cash Value Insurance. Cash Value can also be called Whole Life, Universal Life, or Variable Universal Life. Term insurance is always called Term. The differences between the two are HUGE.

1.    Term: Term Insurance is for a specified time or term. If you have a 10 year term policy, you only have the policy for 10 years. 20 year term policy, you only have the policy for 20 years, etc… it has no savings accounts built into it and it is much cheaper than the Cash Value policies.

2.    Cash Value: Cash Value insurance is a continuing policy meaning, as long as you don’t cancel the policy and keep paying the premiums, you will have the policy as long as you live. It cost much more than Term policies because it has a savings (cash value) account built into the policy.

Looking at the two types like that, it’s almost like a no brainer on which one is the best kind to get. In fact, a lot of insurances companies that sell Cash Values polices compare the two like this. Getting Term Insurance is like renting a home, whereas Cash Value is like buying a home. Again, kind of like a no brainer. Let’s look at it a different way.

Let’s say a healthy 30 year old male buys a $250,000, Cash Value policy. His monthly premiums are $178, which includes paying into the cash value portion. By the age of 50, the cash value will have built up to $34,483 and by 70 it would have reached $124,041. Not too bad huh?

Now let’s say the same guy buys a $250,000, 20 year Term policy instead of the Cash Value. His monthly premiums are $13. That’s a difference of $165 per month. And then let’s say he took the difference and invested it himself into a decent Growth Stock Mutual Fund that gives him an average rate of return of 12%. By the age of 50, that investment would have built up to $164,859 and by 70 it would have reached $1,960,603. WOW! Almost $2 million! That’s a huge difference!!

Both examples the guy was spending $178 per month but the outcomes are totally different. It looks like it’s not so much of a no brainer after all. Now let’s get really crazy!

Let’s take the same guy, but instead of buying a $250,000, 20 year Term policy, he buys a $500,000, 20 year Term policy, twice as much. His monthly premiums go from $13 to $21. And he invests $157 per month instead of $165 into a decent Growth Stock Mutual Fund that gives him an average rate of return of 12%. By the age of 50, that investment would have built up to $156,866 and by 70 it would have reached $1,865,539. The end result is not quite as much but you have to remember that you have doubled your policy amount.

$250,000 + $1,960,603 = $2,210,603 compared to…

$500,000 + $1,865,539 = $2,365,539.

Now if this doesn’t convince you that Term Insurance is an all-around better buy, maybe this will. Taking the $250,000 Cash Value example from above, let’s say the guy dies at 70 years old. How much do you think the beneficiaries get? They get the face value of the policy, $250,000. You want to know where the $124,041 went that he had in the cash value portion of the policy? The insurance company keeps it! Where in the Term policy, you get the face value of the policy, the $250,000 or $500,000 in our example plus what was invested. How does that sound?

The only people that think these Cash Value policies are any good are the ones who sell it because they make a lot of money doing it. Money Magazine, Fortune Magazine, Kiplinger’s Magazine, and Consumer’s Report all say that Cash Value policies are the most expensive and less useful forms of life insurance.

“The right type of life insurance can be summed up in a single word: TERM.”

-Smart Money Magazine-

Because this topic is so big and it’s causing this blog to be too long, I will talk about this a little bit more next week in Part 6b. I will discuss who should get life insurance, how much should you get, what to do if you already have a Cash Value policy and want to change to Term, and what gimmicks NOT to get. I hope you all find this insurance series insightful and would really like to hear your questions as well your input.

 For more money news, facts and ideas follow me on Facebook, or Twitter. Thanks you!

The insurance cost and cash value based on the average of four actual quotes.

Insurance Part 5: Disability

Insurance

Part 5: Disability

By Keith Bunn Jr.

September 10, 2012

Have you ever had to file for either short term or long term disability? Chances are you have. In fact, you have a 1 out of 3 chance of being disabled 6 months or longer. And if you’re over 30 years old, you have a greater chance of becoming disabled than dying by the age of 65. Unlike Life Insurance, disability insurance is based on the type of work you do rather than your age or health. If you work with machinery, your disability insurance will be more expensive than for someone who works in an office because you have a greater chance of becoming disabled. So having disability insurance is a big deal!

What should you look for in a disability policy?

1.    Occupational or “Own Occ”: You want to have a disability policy that will pay you if you are no longer able to do the job you were trained to do. Those types of policies are called Occupational or “Own Occ” policies. For example, as most of you know, my primary job right now is that I’m a C.N.C. operator for a local manufacturing company. A few years ago I tore my meniscus in my left knee while playing racquetball and had to have surgery to fix it. After surgery, there was really no way I could do my job. So I was paid for being temporally disabled.

2.    Beware of Policies… :  Beware of short term policies that cover less than 5 years. 5 years or longer is Long Term Disability. 5 years or less is Short Term Disability. Some experts say that Short Term Disability policies are a gimmick and should not be bought. I partially disagree with that. I think if you are just starting this whole get out of debt plan and you are at the beginning of the Baby Steps, and you don’t have your 3 to 6 months’ worth of expenses (Baby Step 3)  saved up yet, you need some sort of Short Term Disability policy in place just in case something happens. But as soon as Baby Step 3 is in place, I would drop Short Term Disability as soon as you’re able to. I will explain why in a bit.

3.    65% of your Income: You want to look for a policy that will pay 65% of you current income. And you want to buy it with after tax dollars, NOT pretax dollars. The reason is, if you buy your policy with pretax dollars, your disability income is then taxable, but if you buy it with after tax dollars, your disability income is then tax free. And you can then live off of 65% of you earlier income.

How do you make disability insurance more affordable?

Over the past few years, “Own Occ” rates have greatly increased. So what can you do to make them more affordable for you?

1.    The best way to eliminate the high rates: Is to buy “Own Occ” for 2 years only. Using my knee surgery example above, if I had really messed up my knee or something went wrong during surgery and I was no longer able to do my C.N.C. job forever but I was able to walk. The insurance company would pay me disability for up to 2 years. Once the 2 years was over they would tell me “Get a job”, unless I was permanently disabled and in that case they would continue to pay for my disability.

2.    Increase the Elimination Period: The Elimination Period is the time between when you became disabled and the disability payments start. Let’s say from the time you were disabled to time the disability payments started was 30 days. You would have a 30 day Elimination Period. The Elimination Period is like the deductibles on your car or home. If you increase the amount of time between when you were disabled to the time the disability payments, the lower your rates will become. So if you have a 3 to 6 months emergency fund, you could do 2 things. (1) Drop your short term disability policy and use your emergency fund to fund your short term disability. This eliminates a premium you were paying. (2) If you increase your Elimination Period to up to 180 days, your rates will decrease.

I hope you have seen a pattern in these blogs so far. It is the BIG events that can cause serious financial harm to you and your family that you need insurance for. The smaller snags that life throws at you and your family are what the emergency fund is for.

I hope my posts inspire you to look at what you’re doing financially and if needed, make some changes that will cause you to win financially. I also look forward to reading your views on any articles or postings that I may post. For more money news, facts and ideas follow me on Facebook, or Twitter. Thanks you!

Insurance Part 4: Health

Insurance

Part 4: Health

By Keith Bunn Jr.

September 2, 2012

It seems like healthcare has been a major topic in the news for some time now. And with medical bills being the number one reason for bankrupts in this country, along with Obamacare looming around the corner, it is more important than ever to know what your options are.

In my opinion, more and more people are going to have to provide for their own and their family’s healthcare. So this means that you are going to have to figure out what plans are good for you and your family, Figure out what you can do in each plan to make the plans affordable, for the most coverage needed, and finally, get your financial life in order so you can afford the plans that are out there.

Biggest Bang for our Buck

So what can we do to get the most out of every dollar we spend on healthcare?

1.         Increase your deductibles and/or your co-pay amounts. Most people today have an 80/20 insurance plan, which means if you need to use the insurance, your insurance company pays 80% of the bill and you pay 20%. Well if you were to increase your deductible and went to a 70/30 plan, you assume more responsibility and a greater risk than before and that will cause your premiums to go down.

2.         Increase your Stop-Loss without decreasing your Maximum Pay.  Stop-Loss is the maximum amount of out of pocket cost you’ll have to pay. Let’s say that you had a $10,000 Stop-Loss, you would pay your deductible, plus your 20% (if you had an 80/20 plan) up to $10,000. Everything above that, your insurance company would pay 100%. If you had a good 3 to 6 months saved in your emergency fund, you would be able to afford a $15,000 to $20,000 Stop Loss. Maximum Pay is the total amount your insurance company will pay. If you have a half a million dollar Max Pay and the total cost is above that, whatever the remainder is, you’re on your own. I would keep your Maximum Pay to be a minimum of $1 million.

3.         Another way to keep your family’s healthcare down is by using a Health Savings Account (HSA). An HSA is a tax-sheltered account with a high deductible. A typical HSA account has around a $5,000 deductible but has lower premiums than your typical PPO insurance plans. One of the good things about an HSA is that after you have reached your deductible, the insurance company pays 100% of the medical cost. So an HSA makes sense if you and your family fall into two different categories. If they are really, really sick or really, really healthy.

If you or your family member is seriously sick and you would burn through that $5,000 deductible easily each year, the HSA would be a good plan because all you would have to pay each year is the $5,000 deductible, plus your monthly premiums. That’s it! Your insurance company pays 100% after all that.

Now if your family is really health, meaning, you hardly ever go to the doctor at all. You can build up each year a tax deferred savings account by saving your deductible each year. This account can then only be used for medical reasons of any kind no matter what your income is. In a sense, this account, over time, will turn into another big hairy ‘medical’ emergency fund on top of your 3 to 6 months fund.

The only way an HSA doesn’t make sense is if you go to the doctor often enough to where you don’t reach your deductible limit but use enough of the savings to where you hardly have anything left.

Questions

·        Are there any of these things we just went over something you can implement today or the next time you can choose or change your benefits through your employer?

·        If your employer dropped their healthcare benefits package, would you be able to afford healthcare out in the open market?

·        If you’re married and both working someplace that has healthcare as part of your benefits package, have you compared the two plans to see which one is better?

·        Have you checked the open market to even see if there is a better deal out there than what your employer offers?

I hope my posts inspire you to look at what you’re doing financially and if needed, make some changes that will cause you to win financially. I also look forward to reading your views on any articles or postings that I may post. For more money news, facts and ideas follow me on Facebook, or Twitter. Thanks you!

Insurance Part 3: Dental

Insurance

Part 3: Dental

By Keith Bunn Jr.

August 19, 2012

OK, I think every one of us can admit that going to the dentist is not the most favorite thing to do, but in my opinion, going to the dentist it is an absolutely “must do” thing that every one of us should do for a number of reasons.

1.    To prevent gum disease.

2.    To prevent oral cancer.

3.    To avoid losing your teeth.

4.    To prevent dental emergencies.

5.    To maintain overall good health.

But we also know that going to the dentist isn’t cheap. Not just for the reasons listed above, but because of all the other things not listed. Fillings, Crowns, Braces, etc… are just a few things that can be quite costly if you don’t have a good insurance plan in place.

But are all plans the same?

Well, in my research, I came across a website from Amerites Group and it is clear that the answer to that question is no. On their website they have come up with these 10 points to look into.

1.    Coinsurance and Copayments: What is the coverage in and out of network? For PPO plans, know what percent the plan pays by procedure category, typically stated as preventive basic and major. If the plan has a copay structure, know the member costs for common procedures.

2.    Deductibles and Maximums: If the plan has a deductible, when does it apply and what is the amount? Is there a maximum number of deductibles that can be charged per family? What is the annual benefit maximum available per year? If orthodontia is included, what is the lifetime benefit available?

3.    Procedure Placement: In which category do typical procedures fall? Most carriers move procedures into different categories, such as x-rays, root canals, gum disease treatment, or oral surgery. If you are working with a PPO, it is crucial to know if these procedures are classified as preventive, basic, or major as this will impact rates and out-of-pocket costs for insured.

4.    Procedure Frequencies: How often can each kind of x-ray be taken? How many cleaning are permitted per year? How many years are allowed between crown replacements? For example, one carrier may approve replacement of crowns every five years while another may extend the limit to ten years. You need to know these details for each plan under consideration.

5.    U&C Allowances: What “Usual and Customary” allowance is used for out-of-network providers? Not all 90^th percentiles are created equal. The 80^th percentile for one carrier may equal the 90^th for another. Know how the carriers compare, the source of their U&C data and how they update their records.

6.    Special Coverage: Does the plan cover dental implants? What about composite fillings in molars? Does the orthodontia cover adults? Producers need to know this information.

7.    Value Stretchers: Dental plans have come a long way in the last ten years with innovative features, such as carry-over maximums, sharing dollar maximums within the family, and excluding preventive procedures from the maximum. Many plans also offer significant vision, hearing, Rx, and other benefits packaged with the dental. Know what extra incentives are built into the plan to help stretch the available benefits.

8.    Waiting Periods and Participation: What procedures require a waiting period before employees can access benefits?  Is the policy different for current employees and new hires?  What participation percentage of eligible employees does the carrier require?

9.    Network Access.  If the plan design includes a dental network, are there enough contracted providers close to the employer: Producers should know how the carrier counts the network participants, including the difference between access points, providers and locations.

10. Commission. What commission is included in the plan quotes? Do not assume every carrier is quoting the same, or that they are quoting what you asked for in an email. Find out.

After you compare the plan components, look at the rates for each plan. Also, if you have the opportunity to have more than one dental plan, make sure both insurance companies will coordinate benefits. This means, one insurance company will pick up coverage where the other one left off at. Make sure you know this information before starting the 2^nd insurance company because if they don’t coordinate benefits, it makes no sense having the  2^nd one.

I hope my posts inspire you to look at what you’re doing financially and if needed, make some changes that will cause you to win financially. I also look forward to reading your views on any articles or postings that I may post. For more money news, facts and ideas, follow me on Facebook, or Twitter. Thanks you!

Insurance Part 2: Auto

Insurance

Part 2: Auto

By Keith Bunn Jr.

August 12, 2012

Auto insurance is one of those “must have” insurances by law in every state, and for good reason. But most people get just enough insurance to make them legal to be on the road for a couple of reasons.

1.    They don’t have enough money for full coverage. Thinking the monthly premium will be less if they choose a lesser coverage.  

2.    Their car(s) are paid for and don’t feel they need full coverage.

Even though this may make sense in some situations, a good portion of the time it doesn’t. Let’s go over what make sense and what doesn't.

·         Full Coverage: We all know if you have a car loan, you have to have full coverage, but if your car(s) are paid for and you can’t afford to replace them if something were to happen to them, it then makes sense to have full coverage on them.

·         Monthly Premiums: A good portion of the time you are not saving that much on your premiums by going from full coverage to a lesser one. If you really want to save on your premiums, raise your deductible. By raising your deductible, you are taking on more risk and in turn, lower your premium. This, however, only makes sense if you have a fully funded emergency fund in place.

·         Break Even Analysis: Another way to see if raising your deductible makes sense is by doing a Break Even Analysis. If you have a $250 deductible and you raise it to $1000. You increased your risk by $750. Now if your premiums go down by $75, you would have to go 10 years without something happening to your car ($750 extra risk divided by $75 per year in savings = 10 years without an event. Now for most people, that doesn’t make much sense, but if you were to save $750 per year instead of $75, you would then only have to go 1 year without an event happening and that would be well worth raising your deductible. You would have to do the math for your situation to see what works for you.

·         Liability Insurance: Most of the time, when people are trying to lower their insurance cost, they tend to lower the liability portion of their coverage, which in my opinion is not a good idea. Liability insurance is one of the best buys in the insurance world and it really only costs pennies a month and sometimes even a year to have liability insurance. So it makes sense to have a minimum of $500 coverage in your policy.

·         Finding the Best Deals: To get the most bang for your buck, it is better to go through an insurance broker that will shop around for you to find the best insurance for you and your family’s situation. The stand-alone insurance companies like State Farm, Allstate, Farmers, etc… will only sell you there insurance and those may not be the best deals for you. It also makes sense to have your broker do a check every few years just to see if what you have is still best for you and your family.

Questions

1.    If something were to happen to your car(s), do you have the proper insurance in place to cover the loss?

2.    Does full coverage make sense in your situation?

3.    Do you have a fully funded emergency fund in place?

4.    Have you done a Break Even Analysis? If so, does it make sense to raise your deductible?

5.    Do you go through a stand-alone insurance company or an insurance broker for your insurance?

6.    Do you know whether or not you are getting the best deal for what you and your family needs?

I hope my posts inspire you to look at what you’re doing financially and if needed, make some changes that will cause you to win financially. I also look forward to reading your views on any articles or postings that I may post. For more money news, facts and ideas, follow me on Facebook, or Twitter. Thanks you!