“There is no such thing as a bad insurance policy”

That’s what I tell my clients when I tell them the difference between a term policy and a cash value policy, because they like the tax- free component, but I always tell them “there is no such thing as a bad insurance policy, each type has a different job”.

What do I mean by that? A term policy is ideal to cover big expenses such as a mortgage in case of a sudden death. This is only my opinion, but I think if somebody has small children, they should ideally have a 20 year- term policy to cover them while their children are little and also have a cash value policy started at the same time. Once the person outlives the term policy, they still have a permanent policy with cash accumulated over 20 years, which should be a nice amount of money sitting there. Just remember to look at these policies, for the person who can’t put away thousands in to to these plans, as something more long- term.

“An agent told me cash value policies were bad”, and that is because that agent has a vested interest in only offering you a term policy. What is the point of giving a term policy to a 10 year- old kid? Just to inflate your numbers with your colleagues and show “I’m a closer”? What would be the purpose to give a term policy on a 10 year- old? I have a couple who started their two children with cash value policies and, within three years, they already have $1,500 each and they’re both under 10 years- old. So when somebody tells you a statement like that one, go ahead and walk away.

I have no vested interest in offering one plan or another. I have clients who only have term policies because of budgetary reasons and others who preferred to have only a cash value policy but they were younger and could afford to put more money in these plans. Be diversified, you can have mutual funds, a 401K or 403B, a Roth IRA, a term policy and a cash value policy if you wanted to. If you’ve already been contributing for a while towards tax- deferred plans, re- direct some of that money and get a cash value policy.

If you have any questions, feel free to leave me a comment and I can gladly take a look at your situation.

Have a happy Sunday!

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“I’m diabetic”

I hear that a lot, thank God not me, but I run in to a lot of people with this health issue. They want to get a policy, protect their loved ones but then they say “I’m diabetic” and it seems like people think it’s a automatic decline. But it’s not! Don’t kick yourself for that health condition.

The main factor that insurance companies look for is the A1C level, which if you have it up to 7 you still can qualify for a policy. Then other factors go in, such as age, overall health and medical history.

Today I sat down with a client, 62 years-old who seemed like she was in good health until she told me that and thought it would be an automatic decline. I told her that she could get, potentially, $50,000 in coverage for less than $100 a month, which did excite her but then she said “I’m diabetic” and thought I was going to tell her “sorry, I can’t help you”, but much to her surprise I did say “I can still get you insured, we just need to find out your A1C level before submitting your policy, because you don’t want to be declined and then that stays in the record when you try to apply with another company. Even though we didn’t do business today, it was nice to see the level of excitement go up.

Don’t wait until your sick to apply for a policy, do it while you’re healthy and in good shape. A lot of people wait until their health is bad to apply, but there’s no better time than today to take action. Do it while you’re healthy! And if you are having health issues, you can always ask and I can take a look in to your situation.

Decisions, decisions…

From the moment we wake up to the moment we go to sleep, we’re deciding. We decide what to eat, we decide how to spend our time, we decide if we should sit and watch TV for hours or should we read a book. Should we have a hamburger and ice- cream or salad and a fruit? Unfortunately people don’t take their time to plan their future for their retirement, that’s something that “I’ll get around it” and the years pass you by. All of a sudden you reached 50 and you’re so far behind that then you expect the magic pill.

I have so many people I’ve ran in to at 55 or above who haven’t saved a dime for retirement, banking on social security and government benefits and living their last years until it’s all done. Sounds depressing, doesn’t it? Unfortunately that’s a lot of people out there, who tell me “I have life insurance through my job and a 401K” but then don’t decide to do anything different. Did you know that if you leave your job, you lose your life insurance? And why would you only want one year of your salary as your benefit?

Losing a bread winner in the home isn’t just financially, it’s also the person who is no longer physically there. It took my family about 3- 4 years to get used to not having my dad around when he passed away at 48 years- old, me being 12 and my brother 15 after a long battle against a brain tumor. My mom had to go work 12 hours a day to put food on the table. Years later I found out that my dad had a life insurance policy and he let it lapse, saying “I’ll get around it later”. If the agent that sold my dad his policy would’ve done a proper job, he would’ve at least followed up with him and explained to him to keep it, but I can almost for sure, knowing how hard my dad worked and constantly saying “I want to leave my kids set and not suffer financially”, that he probably never got followed up with.

If you the reader are reading this and thinking to yourself “I feel like he’s talking to me”, well… I am talking to you. Don’t leave your family behind because of a procrastination, because you want everything to be perfectly aligned and so on and so forth, take action today!

The worst decision is indecision…

Save money tax- free with guarantees…

Is that possible? Yes it is. Most people think about retirement in the traditional way, get a job and open a 401K and hope it grows, not understanding the rules of how these work and the future taxes you’ll have on them.

Is there an alternative? One is a Roth IRA but you’re limited on the annual amount you can contribute and also, if you make passed a certain amount of income, you can’t place anymore money in them. Imagine people in the higher tax bracket, they’re not allowed to place their money in these accounts, which can also make you lose money.

The alternative is a life insurance policy, but also which one? Different “experts” will pitch in what they want to sell you and won’t tell you about the alternatives. The common one is Wholelife, where they paint you this picture of unbelievable returns only to find out you’re barely making any money. There’s also Universal Life, a little bit better than Wholelife. But the market has improved and in comes the Index Universal Life. Since I work with around 20 different providers, I can’t tell you what interest rate is for each company, but I can tell you, in summary, it has a guarantee not to lose and it can earn you somewhere around 15% rate of return. And what if I told you to borrow money from this policy you only got charged around 1% and you weren’t obligated to pay it back? Sounds too good to be true? Could be, because you also have to qualify for this plan!

I can definitely help you customize a plan for you within your budget as well, because everybody needs to plan sooner or later, but make sure it’s sooner!

Get insured!

I always am thankful that I learned about this business and that I became aware of life insurance, the costs and the different plans out there. With all these viruses going around today, why not get insured? I recently insured a man for $250,000, he decided on Friday to increase his coverage to $500,000. That was going to be $140 a month, to which he said “I spend that on other things anyway, might as well use it the right way”.

It saddens me every single time I see the little box at a restaurant and people asking for donations to bury their loved ones. A lot of times it happens because of not knowing who to ask, not being asked or because somebody didn’t push them to fill out an application. According to the latest statistic, between 54 and 63% of people own a policy. And I can guarantee you that percentage decreases when looking at how much insurance that person has and the type of policy. It reduces itself even more if there’s a way to see the income of the families getting protected, because most families, if they’re making less than $100,000 a year they don’t even have somebody to talk to regarding all of this.

As you’re reading this article you might find yourself without life insurance and thinking of either the excuses of why you don’t want to get it or making these calculations in your head of what the cost is. You can’t look at it as a cost, because what will the cost be of leaving your family without your income? What will your kids do? Having something is better than not having anything…

If you have any questions, I can definitely help! Feel free to contact me.

“My agent told me to buy term”

I read so many takes on twitter about money, about insurance agents “pushing the Index Universal Life policy”, about “just buy term” or “I offer Whole Life over the IUL because it pays dividends”. All of this comes from so- called financial advisors or people who say they have their best interest in the consumer, but it seems like the best interest is in their own pockets.

I also recently read this take:

Financial advisors don’t like annuities, most likely because they can’t sell them. So they’ll come up with anything to discredit insurance agents and just push their own agenda. By the way, an annuity has multiple plans and yes, the agent should understand it before they offer it to you so you don’t get locked in long- term when that wasn’t what you wanted. But statements like the one above is a horrible take from somebody who calls himself a professional and came up with a long article to discredit annuities, when there are so many annuities out there.

I also read “just buy a term policy”, but what would a 10 year- old do with a term policy? I talk to clients who have 4 policies without understanding what they had until I tell them “the policy you have on your child only works if something happens to your child, were you aware of that?” and the answer is always “no, they explained to us that it was also going to help us save money”, because of “buy term and invest the difference”.

This is how most people feel after reading so many things online…

Speaking of “buy term and invest the difference”: yes, buy a term policy if you have small children or a mortgage, have savings and you can also start a Index Universal Life policy. You don’t need to limit yourself, but also make sure everything fits within your budget.

So when sitting down with a financial advisor or insurance agent, make sure to ask questions and to show you illustrations backing what they say. In closing, here are valid questions you can ask an agent when looking at a Index Universal Life policy:

If you have any questions, I’ll be more than happy to help.

“The IRS: Theirs”

A lot of financial advisors, which I am not, just mention about buying XYZ stock or “maximize a 401K” but there is never an explanation of what to expect regarding taxation on these accounts. With this article, I hope I can help you, the reader, understand what will happen in the future with your accounts.

When it comes to retirement we can separate taxes in three categories: Tax Now, Later or Never.

(Source: Matthew Battaglia)

Tax Now:

These are accounts that are set up for immediate access, such as mutual funds, stocks, bonds. You can plan short- term with these but you will get taxed on capital gains at the end of the year, plus you are at the mercy of the market and make sure you are aware of that.

Tax Later:

Accounts that are offered by employers such as a 401K or other tax deferred accounts such as IRA’s and 403B plans and other Government Qualified Plans. These plans are good for long- term savings, plus if you’re an employee you should consider having a 401K if your employer offers matching contributions, but keep in mind that you have to wait until you’re 59 1/2 to access these plans without penalties in most cases. They are called “tax deferred” because you don’t get taxed every year, you get taxed and penalized for an early withdrawal, you get taxed after 59 1/2 and there is also something called “Excise Tax” at 70 1/2, which means if an account owner fails to withdraw a RMD, fails to withdraw the full amount of the RMD, or fails to withdraw the RMD by the applicable deadline, the amount not withdrawn is taxed at 50% (you can find more information here: https://www.irs.gov/retirement-plans).

Here you have additional information on how to avoid paying early withdrawal penalties:

https://money.usnews.com/money/retirement/slideshows/ways-to-avoid-the-ira-early-withdrawal-penalty?slide=4

Tax Never:

You mean to say “I never get taxed?”, yes, that’s what it means. It’s divided in two accounts: Roth IRA, which a lot of advisors shove it down your throat as the best plan out there despite all the limitations and risks it carries and permanent life insurance, which I will give an overall explanation because there are 4 different kinds of permanent policies.

Roth IRA’s are a great tool to save money for retirement because they allow to save money tax- free and are accesible penalty- free after 59 1/2 and there is no Excise Tax in place. The limitation is how much can be contributed yearly and it also has no guarantees, so if the market goes down you will lose money.

Like I mentioned before, the other option is Life Insurance with Cash Value (you can find more information about on this link: https://retirementfanatic.wordpress.com/2020/03/26/life-insurance-options/).

While I do offer life insurance, I also tell clients to make sure themselves what they feel comfortable purchasing. If an agent tells you that one product is better than another (Whole life vs. Index Universal Life) have them show you both illustrations and not just their opinion. If they can’t offer both illustrations, then how do you know that agent has the best options for you?

This is how people feel at the beginning of the year… (source: Moneysense)

Bottom line, we all pay taxes one way or another, but why put yourself in a position to pay taxes in your golden years instead of saving more for yourself? If you have any questions, feel free to contact me, thank you.

Daniel Chalian, License #0F66832

A Roth IRA doesn’t solve everything

It’s been a while since I last wrote an article. I have been on twitter more often just reading other people’s opinions on finance. The more I read, the more I realize the lack of knowledge there is when it comes to life insurance. Unfortunately everybody pushes an agenda and will directly say that a Index Universal Life policy is a bad plan. The common theme is “the fees”, as if other financial plans or institutions work for free. The cost of insurance is very low in comparison to the money earned in this type of plan.

Here are highlights about Index Universal Life policies:

-Death benefit which can increase with the cash value saved if that option is chosen.

-Tax- free growth.

-No limits on amount of contribution. The limitation is based off of the amount of coverage applied for.

-Flexible contributions: if you decide to contribute $1,000 a month and then can’t one month or for a period of time, you can decrease the amount contributed.

-Guaranteed not to lose money.

In the graph you can see the difference between one product and the other:

Source: https://www.lifepro.com/Blog/PostId/1911/iul-vs-roth-ira-which-one-is-better-for-me

I was recently reviewing a plan for a client of mine who’s now 74 years- old. I met him randomly, just walking into his office and he was willing to sit down and listen to somebody half his age. He gave me a chance and applied for a small $50,000 policy back in 2014, probably to see “if this thing works and this kid is saying the truth”. 10 years later he has $9,522 saved, so his coverage is now at $59,522. “Oh, but if you invest directly in a ETF you can earn more interest”, true, but you don’t have coverage and you aren’t protected against losses either. There is no such thing as a perfect plan, although in my opinion the Index Universal Life is pretty close to it, but this is only my opinion.

Here are the details to his plan. Please keep in mind he’s a Senior, he should be contributing more but he just wanted to test this plan out:

Total contributions since 2014: $17,084. Divide that by 8 years, $2,135, divided by 12 that equals $178.

Total cash value: $9,522. Divide that by 8 years: $2,135, divided by 12 that equals $99.

What this means is that if you do 178-99= 79. $79 a month is his cost of insurance, which he applied for when he was 66 years- old, permanent policy and the rest gets accredited to his account. He just today finished his application for a 15 year policy for $150,000 with benefits if he gets critically or chronically ill. He opened this policy to have it in case something happens to him and his house can be paid off. By the way he’s had his own tax- firm for 25 years, in case you were wondering about his background and how much or how little he knows about saving and investing.

Life insurance is a very personal decision and don’t let an agent or an advisor tell you which one you should or shouldn’t purchase. Make sure you get all the details and always ask the agent to clarify any questions or doubts. The worst decision to make is the wrong one because it wasn’t explained.

I also do want to clarify that Roth IRA’s do have benefits as well: tax- free growth which you can start accessing after age 60 and no excise tax at 70 1/2. When purchasing a Roth, try to get some help from the Broker you are purchasing the plan to know where to invest the money and be able to maximize your contributions, but just know that it’s not guaranteed if the market goes down.

Be careful…

Be careful who you take advice from. There are a lot of experts on everything out there, so who should you listen to? The talking head on TV or radio? The agent who speaks negatively about a product because they can’t offer it?

I ran into two agents from another Broker Dealer who only sells term insurance. When I asked them to explain cash value policies, they started talking to me about “prospectus” and other terminology that they probably had heard but had no clue what they were saying. When I explained to them that were talking about “Variable Universal Life” they looked stunned because that’s not what they had been told. Agents generally only learn what their office teaches them and don’t try to expand their knowledge and really figure out if what they’re offering is really the best product for their clients. So be careful who you take advice from.

Also be careful with agents who upsell you a cash value policy and tell you to put away, as an example, $100 a month and “you build your own bank”. Cash value policies are designed to help you save towards your future, but make sure you are really putting enough away. Each situation varies according to the age and health of the person applying for a life insurance policy. For a 18 year- old, $100 a month can work but for a 50 year- old it won’t. So be careful who you take advice from.

Also be careful with those who just tell you to max out your Roth IRA. Max out your Roth but do they tell you where to allocate those funds? If you have no idea what funds to buy, it can be a problem because your money will barely grow or, even worse, you might lose money.

Am I saying that everybody is biased? No, there are good agents out there who truly care about their clients. When you sit down with an agent, make sure to ask as much as you can. That will determine how much they know and also if they truly care about your own needs.

Term insurance? Permanent?

Most people, when looking for a life insurance policy, just think about “what’s the cost?”, which is a valid question. Most agents, just to get a sale and get a commission, just offer a term policy, vaguely explain the details and make it seem like “for a cup of coffee a day, you have protection on your family”, but is that what you really wanted? Is the coverage you have also enough?

The worst thing is running into an agent with an agenda who only wants to sell you what makes them the most money but may not be suitable for you. There are insurance agents who can only sell term policies and will talk badly about cash value policies (I had a scenario where they told the client that the cash value portion GOES DOWN and other lies of that sort. It’s a generalized statement, because the cash value can go down if not properly structured or if a person starts to take loans from their policy, but to say that the cash value goes down without explaining anything is only to make the person fearful). There are also agents who only offer cash value policies as a way to get people “properly insured” and almost disregarding term policies.

I have a couple I sat down with on Saturday, they applied for two term policies, $250,000 each with an addition of receiving $1,000 a month for disability income if they were to get disabled and they’re self- employed. They both applied for a 30 year- term policy. They also have two kids and they’re looking at getting two cash value policies for them towards their future. A misconception I keep on hearing is “college plan” for children’s policies. Make sure to take a look at the illustration and see how much money will be in the account at 18 before you tell people it’s for “their college”. I always tell my clients “it’s for the future of your child” and show them how much money will be in their account by 60. Also, once the child is approved for life insurance, they have it permanent and will not have to worry when they grow up about having to qualify for a policy, unless they wanted to purchase another one.

Just remember this: THERE IS NO SUCH THING AS A BAD POLICY.

If you have any questions regarding your policy or would like more information, feel free to contact me through here or by my email, danielchalian10@gmail.com

To disclose or not to disclose…

People don’t like to pay for things. People don’t like to spend on anything. People want life insurance to be cheap BUT…

–They smoke: “don’t say you smoke, it’ll be more expensive!”, but at the time of the claim, if the insurance company finds out you did smoke they can reduce or even deny the claim because of lying on the actual application. And this goes to agents as well, because you don’t want to find yourself having to explain to a grieving family that they won’t be receiving a check because they’re the ones that decided not to put that in the application.

-If you start smoking after you got insured, make sure to let the insurance company know because it also goes back to the previous paragraph. Also if you stop smoking, you can re- qualify at a lower rate!

“Vaping is still considered smoking by almost every single life insurance company available, except one, because of the nicotine still involved in vaping, and the lack of studies surrounding vaping. Vaping and life insurance is too new of a a topic to have enough evidence on long term health, so many companies are still shunning the idea of awarding non-smoker rates to those who have not completely stopped.
All but one.
One company issues non-smoker, and even non-smoker plus ratings to those who have ceased all cigarette smoking for over a year, and vape instead.” This is an example of “enticing the consumer” because they’re telling “all but one”, but “which one?” and then you have to apply for a policy…

-They drive without a driver license: yes, people do drive unlicensed. If you apply for a life insurance policy and don’t have a driver license and you’re an adult, they will ask “why doesn’t the insurer drive?” and people will be tempted in lying, such as saying “I get driven around, I take the bus” but the truth of the matter is that if a person does drive without a driver license, it is an automatic denial. I should know after two different cases, even after sending the insurance companies (three different ones by the way) proof that they have car insurance (you would be surprised with what type of documentation people get car insurance or even register a car under their name) and the insured was still rejected for that. The explanation is the same as in the first example, if you’re an agent you don’t want that mess on your hands…

Insurance companies do verify your information…

My advice is to always say the truth, it avoids headaches for your family. If you’re an agent and you lie on these little things, just know it’ll come back at some point. And speaking of agents, make sure to always do the right plan for families, become a student of the products and if you don’t know, call the providers. There’s always room for improvement, even myself I don’t consider myself an insurance genius and everything I’ve posted on this site has been from talking to the providers and learning.

If you have any questions, feel free to leave a comment or you can email me directly.

Athletes and investing

We’re in a different era now, with social media, internet and even TV has changed. And so have athletes. It’s now less and less the case of the athlete who made millions and went broke because all the athletes talk to each other. One day I was reading I believe was an interview to Draymond Green, the player for the Golden State Warriors in the NBA and the interviewer asked him what do they talk about in the locker room. Much to my surprise, he said that they “talk about investments and where to put our money.” Unfortunately there are still financial advisors out there who don’t do what they’re supposed to, like in the case of ex NBA player Tim Duncan, who’s advisor stole $24,000,000 (you can read about it here: https://www.sacurrent.com/the-daily/archives/2018/01/26/tim-duncan-receives-75-million-settlement-from-ex-financial-adviser-who-defrauded-him).

I personally know the dad of a current NBA player (for privacy reasons I won’t say who it is, he’s a starting player for one of the teams). In getting to know him, I was asking him how the life of the NBA is and he said that the League gets together with the players and parents the day before the Draft to get them ready for the contract that they will receive and to get them ready mentally about how their lives will change. At the same time, he actually asked me to get his mom insured, but she unfortunately has Alzheimer’s and couldn’t qualify for a policy.

Players in the leagues in the United States are employees of the League, so all they get them set up with is some mutual funds and a 401K. And my question is always: “why have a 401K where you can only contribute $19,500 a year and you also have to wait until you’re 60 to access it?”

CAN A INDEX UNIVERSAL LIFE WORK FOR A PROFESSIONAL ATHLETE?

Yes! As a matter of fact, it would be an excellent plan to start saving towards an athlete’s future once he finishes playing. A 1st Round pick makes anywhere from $1.5 million to a little over $8 million, so this plan can definitely work. In the illustration below I designed it for a 21 year- old and with coverage at $100,000,000 considering he will play 10- 15 seasons and his net worth will grow over time with properties, cars and other family planning.

Initial Annual Premium: $1,743,699.50, Initial Face Amount: $100,000,000 (For illustration purposes, I used the software from Transamerica. The interest earned can be up to 15% with a floor of 0.75%, but for illustrative purposes it will be illustrated at 7.1%)

So in this case, if his initial contract is around $4,000,000 he would be putting away almost half of it in this plan towards his future, as a way to limit his spending because it is so easy to spend if you come across all this money at once. Shaquille O’Neal spent $1,000,000 in one day when he signed his initial contract and his financial advisor told him he was going to go broke if he kept spending that way.

One question that usually comes up is “how long does it take to have access to this money?” and it all depends on how much was placed in to it initially. I also emphasize to look at these plans long- term, because that’s when the interest kicks in.

Download

Cash surrender value is the amount the client receives if they cancel the plan, so the first year is 0 because the insurance company wants to make sure people keep it long- term.

Cumulative Premium is the addition of all contributions. In this case, by year 5 the contributions are at par with the cash value (Policy Value)

Death Benefit is the amount the beneficiaries would receive if something were to happen to the insured. As you can see, it increases yearly with the cash value, so if something were to happen the cash accumulated gets added to the Death Benefit and it’s tax- free.

“The cost goes up every year” yes it does, but so does the credited interest! Let’s take a look at year 15 of the plan (2nd to last page): $247,000 in cost of insurance but the credited interest is almost TWO MILLION! If you were to get $2,000,000 out from a 401K or IRA, you’d be taxed around 40%, which would be $800,000!!

It’s such a shame to see athletes or musicians makes millions and then mishandle their money because of a lack of guidance and planning. Athletes can make a great amount of money but can also have devastating consequences if not properly managed.

Why settle only for a Roth IRA?

I read a lot of specialists in finance who recommend either an IRA or a Roth IRA, but do you know the limits on Roth IRA’s? And how do you know which funds to pick? Because when you open a Roth, you also have to pick the funds for the money to start working for you (or against you if the market goes down).

Courtesy of https://www.cs.bank/personal/individual-retirement-accts

On the above graph, what is not explained about the Roth is that you have to also wait until you’re 59 1/2 to access it but it is tax- free. The difference also is that you don’t have the 70 1/2 rule, but what’s the catch? Do the wealthy contribute in this kind of account?

Courtesy of https://www.questtrustcompany.com/2020/12/21/2021-contribution-limits-iras-and-beyond/

Bottom line, you have limits on how much you can contribute and if you make too much money, you also can’t open this account. I always talk about being diversified, but for somebody who makes too much money and wants to save on taxes and not lose money, then the alternative is the Index Universal Life policy. Yes, life insurance:

Courtesy of https://www.alignable.com/greenwood-village-co/world-financial-group-inc-3/index-universal-life-insurance

no 59 1/2 or 70 1/2 rule, no income limits, flexibility for contributions, money accessed tax- free. There are only two obstacles with these plans:

1. You have to qualify! Yes, it is life insurance, so you still have to be relatively healthy to be able to open these types of plans.
2. Make sure that the agent setting up this plan is competent and knows how to set up these plans: did they show you a proper illustration? Did they show you the flexibility in payments? Were you shown the cost of insurance? Surrender amount in case you decide to cancel the policy for whatever reason? These are all legitimate questions and your agent should have the answers to all of these questions.

Just know this: market goes up, your money goes up, market goes down, it’s guaranteed not to lose!

If you have more questions, feel free to contact me, thanks!

“I don’t know what my car insurance policy covers”

Do you know if you’re properly insured if you get in to an accident? Did anybody ever explain what those numbers on your policy mean?

Photo courtesy of https://www.thepointinsurance.com/products/auto-insurance

The minimum coverage for California is $15,000 per person injured/ $30,000 for the entire accident and $5,000 in property damage. Have you ever looked at your policy? $5,000 covers practically nothing, it’s almost like driving without insurance: In 2015 I had a very minor accident rear- ending somebody at 10 mph making a right turn on a yield sign and surprisingly this other driver had fully stopped midway as I was also checking to see if any cars were coming. The insurance company charged my insurance $1,200 for literally a black scratch on this man’s bumper (I even jokingly told him I could paint his red bumper). That goes to show that if you only carry $5,000 in coverage and the damages to the other car are above that amount, then you’ll be paying out of pocket. At the very minimum you should carry $10,000 in property damage and the difference in premium is only a few more dollars.

Have you ever heard of Uninsured Motorist Protection? This protects you if you get crashed and injured by a driver who doesn’t have insurance or doesn’t have enough insurance to cover for injuries and also for property damage done to your car. The maximum coverage you can carry is the same that you carry against other drivers. And you can include medical payments for a few extra dollars, which vary depending on the insurance company and covers for all passengers in the car at the time of an accident. For example: if you’re at a red light and another driver crashes you, injures you and obviously causes damage to your vehicle and that person doesn’t have insurance and you don’t carry this additional coverage, there is NO COVERAGE. Option B is to hire an attorney and taking that person to court and who knows how long that can drag itself.

Source: https://injurylawyeraustintx.com/why-you-need-uninsured-auto-insurance/

There are also higher coverages you can get: $25,000/ $50,000/ $25,000, $50,000/ $100,000/ $50,000, $100,000/ $300,000/ $50,000 or $100,000 and $250,000/ $500,000/ $250,000 and some other variations in between. These coverages cover you mainly if you crash somebody else and there are injuries and you get sued, then your insurance will cover for those amounts.

Another question people have: does my car insurance carry over if I drive to another State? If you’re only visiting, then your insurance carries itself over and will cover for the state minimums in that State, but if you move then you MUST purchase a policy in the new address that you’re living in.

Source: https://williamsonsource.com/frequently-asked-questions-car-insurance/

“I WANT FULL COVERAGE”

Full coverage mainly covers for claims. If you’re not financing your vehicle and your vehicle, in most cases, if it’s over 10 years old, then it’s not worth doing full coverage: the amount you would pay for the deductible will most likely be the same or more than what you would pay to repair your vehicle. The higher the deductible, the less you would pay monthly. Most people pick either $500 or $1,000 but some insurance companies allow $100 deductible. For example: the glass on your car gets broken, the cost is $400 but your deductible is $1,000, would it make sense to pay $1,000 for a $400 repair?

Source: quoteinspector.com

What happens if I get covid? And other thoughts…

It’s the question most people have in general, but since here we cover aspects of life insurance, I just wanted to let you know that if you apply for a policy and you test positive for the virus, the insurance company will place your file on hold for 30 days. Once you are recovered, you can follow through with the medical exam (if there is one) and all other requirements.

–How do I know if I’m getting the right insurance?

An agent should be able to explain all the details and the pros and cons to term insurance and cash value policies. An agent should be able to you that term insurance is for only a set amount of years. Also, if they offer to get insurance “for your children” and it’s a term policy, that will only pay them if the child passes away and nothing else. I always tell my clients that term insurance is a great product to have because it’s very low in premium and you can purchase a lot of coverage. With cash value policies, you should be shown the max contribution and also the minimum. The difference between the two should be significant, which means the agent does care more about you than about the commission they’ll make. If the difference is very little, the agent is maximizing their profit and giving you, the client, very little benefit for your cash value.

-“I pay $5 a month for insurance”

Are you familiar with Accidental Insurance? A lot of times people purchase these policies, which are very inexpensive but not knowing that they will only pay out the benefit if you pass away in the scenario that comes with the policy, which has to be by a specific accident.

I also read from other agents about “how do I convince clients about cash value policies?” and my thought process is “we’re not in the business of convincing people, all you have to do is explain each product and the client will let you know what they want” and sometimes it might just be the wrong person who doesn’t see it or the timing might just be off.