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If life insurance buying is approached in the proper manner it
can be very beneficial to yourself and your family. You need to
take the time to give some thought to a subject that can be very
unpleasant. I guess that is why most people don’t think about
it, or at best think about it only after they have had a brush
with death, or when a life insurance professional brings up the
subject.

Sometimes these people wait until it is too late to do something
about such a critical matter. They find themselves uninsurable
when they discover they have some critical illness. People
should give life insurance buying serious thought at least once per
year as ones situation may change and you find that your need
for life insurance may change as a result.

These are the questions any good life insurance agent would ask.
Your answers would help him or her come up with an accurate
amount that would be a perfect fit for you. Here are the
questions.

Should I buy life insurance to pay for funeral expenses when I
die or do I prefer to have this taken from accumulated cash?

Do I need a policy to pay estate taxes? This is for people with
an estate in excess of $1,500,000. Estate taxes may be repealed
in the near future. The congress is looking at this matter at
the present time.

Do I want to leave a lump sum for my family and how much? If the
beneficiaries are well practised in handling large sums of money
then this may be a good idea, otherwise, it may be wise to
provide an income.

What about an income? Should I set up an income for the lifetime
of the beneficiary, or should the income derived from the
proceeds of the life insurance policy be paid out for a limited
number of years? Should I let the insurance company hold the
principal and pay out an income to the beneficiary?

How about life insurance on my spouse? Would that be a good
thing? What about the children, is there a need for life
insurance?

If you have a business, is there an employee that you could
consider a key person? Should you have some life insurance on
him or her? If your business partner died, what would happen to
his shares? What would happen to his family?

Ask yourself these questions when doing your life insurance buying and you will know whether or not
you need life insurance, and if you do, how much you should buy.

If you manage a small business you’ll dread the possibility of a member of your team being be taken seriously ill or dieing. Apart from the personal upset, your business would be hit hard. Sales or production could take a dive, key skills could be lost and the general pace of the business could fall. All this costs the business money.

Insurance is available to offset those financial risks, risks that can be especially serious for smaller businesses. After all in smaller businesses other employees can’t be moved across to fill the gap - there’s simply no one spare. So the problem remains until the person either returns to work or is replaced.

If the person is off sick with a serious illness such as a stroke or a heart attack you simply don’t know when, or if, they’ll return to work. It could be a month, six months even a year or more. Management is then caught in a cleft stick. Do you take on a temporary employee, contract out or recruit a permanent employee? Or are you forced to tread water and wait for matters resolve themselves? That’s risky. And how much will all this cost the business in terms of extra overheads, lost sales and profit?

Keyman Insurance has traditionally absorbed these very real financial risks but nine out of ten small businesses still don’t carry that insurance. It’s either because they haven’t addressed the problem or they’ve found Keyman Insurance to be too costly.

A Simon Briault, a spokesperson for the Federation of Small Businesses said, “In an ideal world, small firms would be insured against everything, but reality demands the businesses prioritise threats and occasionally take risks”.

But there is a cheaper alternative. It’s called Group Critical Illness Insurance. And it’s about half the price of normal Keyman Insurance!

With Group Critical Illness Insurance, the management decides which employees to insure and how much to insure them for. The business then pays the premiums and receives any lump sum payout. A claim can be made as soon as any of the insured employees are diagnosed with any critical illness which is scheduled within the insurance policy. As you would expect heart attacks, strokes and cancer are the biggest three biggest reasons for a claim but the full list of insured critical illnesses is much longer. For example, kidney failure, meningitis, paralysis and even blindness.

The important point to realise is that to make a claim, the insured employee must survive at least 28 days after their critical illness is diagnosed. (Some insurance companies have now reduced this to 14 days so please check before you buy.) Therefore, if the employee were to die before the end of the survival period, any claim would be invalid. In that context, it’s not as comprehensive as full Keyman Insurance - but at around half the price of there has to be some compromise!

Simon Burgess, the MD of British Insurance says: “Group Critical Illness Insurance is a real alternative to full Keyman Insurance - and at around half the cost, it’s great value for money. If managers find Keyman Insurance too expensive there’s little excuse for not covering the biggest part of the risk with Group Critical Illness Insurance. Don’t pay the price for apathy”.

Express life insurance specialise in providing life insurance quotes along with providing a huge resource of life insurance information.

What is Medicare?

Medicare is a federal health insurance program that covers approximately 43 million Americans who are:

• age 65 or older,

• any age with permanent kidney failure, or

• any age with certain disabilities

The parts of Medicare are:

• Part A: Hospital Insurance

• Part B: Medical Insurance

• Part C: Medicare Advantage

• Part D: Prescription Drug

Part D is new for 2006

Part D coverage is a new prescription drug benefit effective 1/1/06. It does require enrollment and the premium will be subsidized by the government. Part D does not impact Part A or B drug coverage because a drug that is available under Part A or Part B is excluded from the definition of Part D drug and , therefore, cannot be included in Part D basic coverage.

What are the Standard Medicare Part D Benefit Highlights?

• $250 deductible

• Medicare will pay 75% of drug costs up to $2,250

• Enrollee pays 100% of drug costs between $2,250 and $5,100 (this is called a coverage gap)

• After $3,600 in out-of-pocket spending, Medicare will pay approximately 95%

• Part D members must pay a premium for Part D

Can insurance companies offer better benefits?

Yes, but they must also offer a plan that is actuarially equivalent to the standard plan. All Prescription Drug Plan Sponsors must be approved by CMS.

Beneficiaries with limited income and resources may qualify for extra help. For more information you can check the Social Security Administration website at www.socialsecurity.gov or the Medicare website at www.medicare.gov .

What about Medicare Discount Drug Cards?

Medicare Discount Drug Cards will no longer be available after December 31, 2005. The discount drug cards can be used until May 15, 2006 or until the beneficiary purchases Medicare Part D, whichever comes first.

Enrollment in Medicare Part D

Medicare Part D is open to anyone who is entitled to Medicare Part A OR enrolled in Medicare Part B.

Enrollment is voluntary BUT if you don’t enroll when first eligible a late enrollment penalty of 1% of premium per month will apply. At this time there is not a cap on the late enrollment penalty.

What if you don’t like the Part D plan you signed up for?

You can stop your Medicare Part D benefit plan at any time but you will not be allowed to join another plan until the annual election period. The annual election period will be from November 15 through December 31
of each year. Late enrollees can only join a plan in the annual election period.

There are special enrollment periods for some situations. Some of them are:

• A permanent move out of the plan service area

• When someone enters or leaves a long-term care facility

• Involuntary loss of, or reduction of, creditable coverage

Part D and Creditable Coverage

Medicare beneficiaries who have another source of drug coverage may stay in that plan and not enroll in Medicare Part D IF that other source of coverage is at least as good as the Part D standard benefit, which is called “creditable coverage”. If a beneficiary has creditable coverage they will avoid late enrollment penalties when they enroll for Part D.

Employers must notify anyone who is currently covered under a group health plan if their drug coverage is considered “creditable coverage”. Not all group plans are considered creditable coverage.

What Drugs are in the Formulary?

This is where the benefits get a bit tricky to understand.

The actual drugs covered by each Medicare Drug Plan are determined by the Plan. If a company offers three different Part D plans the formulary could be different for each plan.

It is important to people enrolling in Part D to check the formulary listing for the plan they are considering.

If someone gets a drug that is not on their formulary they will need to pay 100% of the drug cost and that amount WILL NOT apply to their out of pocket.

What happens to people who have Medicare Supplements H, I, or J?

They can change to a different Medicare Plan or they can keep what they have. The drug coverage on the supplement plans H, I, & J is not considered creditable drug coverage. Plans H, I, & J will no longer offer prescription drug coverage to new subscribers after 1/1/2006.

How do people sign up for Part D?

They can sign up directly with a PDP provider or with a certified broker. Signing up thru a broker does not change the premium. The benefit of signing up thru a broker is that you have someone local to call with questions.

A qualified broker can help you check the formulary and understand your
options. If you sign up directly with a company and then later have questions
you will need to call the company and work your way thru their voice mail options.

Don’t hesitate to call Robyn Hamlin at 314-438-0222 or send her
an email.

Article submitted by:
Robyn Hamlin
Group Benefits, Inc.
Benefits for Groups & Individuals
http://www.grpbenefits.net
PH: (314) 438-0222

Robyn Hamlin has been in the insurance industry for 22 years and has seen a lot of changes with time. She works with groups and individuals for health, dental, disability, legal, and identity plans in addition to voluntary benefits. Don’t hesitate to contact her for questions.

Homeowners insurance was created to protect homeowners in the event of disasters that threaten their homes and possessions such as fire or theft. Although these events are occurrences that most people do not even want to consider happening to them, the fact is that they do occur often throughout the country and they must be properly prepared for. Homeowner’s insurance is the best way to ensure that you are protected from unforeseen damage to your home. If a major disaster does occur, you will be extremely happy that you have decided to insure your investments.

When you choose to purchase homeowner’s insurance, an insurance company will decide how much money will be allotted to you in your homeowner’s insurance policy. The amount will depend on the value of your home. Oftentimes homeowners do not understand why the coverage amount allotted to them is less than the price they paid for their home upon purchase. This is because the price you purchased your home for is based on the overall value of the home, the land, its location, and a number of other things. Your homeowners insurance only covers the structure of the home itself, since the land is not considered damaged in the event of any damage to your home covered by the insurance (please note: in the United States homeowners insurance does not cover earthquakes).

There are a few requirements for those who wish to get homeowner’s insurance. In order to qualify for a homeowner’s insurance policy, you must own the home you are insuring and also live in it. If you own the home and are renting it out, you will not qualify for homeowner’s insurance. If you are renting a home you will qualify for renter’s insurance but not homeowner’s insurance. When shopping around for the right homeowner’s insurance policy for you, you will find that there are a number of types of homeowner’s insurance, depending on what you would like to cover. Dwelling coverage covers your home and any attached dwelling areas that you do not live in, such as your garage.

Coverage for Other Structures will cover all dwellings on your property from large storage units to garages to guest homes. Other structures can also be defined as swimming pools, hot tubs, decks, patios and other structures on your land. Personal property coverage covers the contents of your home. With personal property coverage not only is your home covered in your insurance policy but all your possessions located within the house that could be stolen or damaged in the event of a disaster are covered as well. If you have a number of expensive items within your home, this is probably a very good investment for you since you would have a number of large investments at risk in the event of a burglary, fire or other unforeseen event. Loss of Use coverage is vital if your home is left damaged so badly that you can no longer live in it. In the event of a disaster that leaves you with no home to live in, this type of homeowner’s insurance will allot you a specific amount of money to cover bills for hotel stays, meals at restaurants, etc.

It is clear that there are a number of options for anyone who wishes to invest in homeowner’s insurance depending on what they wish to insure and how much money they wish to spend on a homeowner’s insurance policy. No matter what area of the country you live in or how much you home and its contents cost, homeowner’s insurance is truly a must for anyone who owns a home. In the event of a major disaster homeowner’s insurance can be your only saving grace in preventing you from losing major amounts of money and property. If you do own a home and do not have homeowner’s insurance get in touch with an insurance provider as soon as possible to make sure the unthinkable does not happen to you. If you have never invested in homeowner’s insurance before, most local insurance agencies will be happy to have an agent sit down with you and walk you through the logistics of homeowner’s insurance. It will be one investment you will surely be glad you made.

Isabelle Boulay writes for OnlineTips.org, where you read about homeselling tips, using landscape design software and basement dehumdifiers.

I have written many articles about the hard surety bond market. To my surprise many want to know more details as to how we got to where we are at. Like all industries the surety bond industry is heavily influenced by the economy. We can all remember the strength of the US economy at the end of the millennium; it seemed that businesses were flourishing with prosperity everywhere you turned. By the end of 2000 the economy began to slow down. The success of any contractor is directly effected by changes in the economy, thus more contractor’s businesses began to fail. With the failing of the contractor businesses came an abundance of claims. This is not to say that the soft economy was the only cause for the increase in claims, but it was the start of the domino effect.

What actions set up the rest of the dominos to trigger the current hard market? In an attempt to generate more premium bonding companies used very loose underwriting practices. These loose underwriting guidelines allowed for contractors to be approved for bonds they should not qualify for. The sureties were not only writing bonds for contractors that do not qualify, they also wrote bonds that should not be written even for the best contractors. Maintenance bonds exceeding 5 years were a lot more common, these days anything over 3 years is pretty much unheard of. To put it simply the sureties grew too hungry for business and wrote what they should not have and got burnt because of it.

The bonding companies set up the dominos and the softening economy started the chain reaction of them falling. What was the outcome for the bonding companies? In the past, the surety bond industry will see losses around 25%. In 2001 the industry saw an staggering 82% loss for the year. In 2002 the industry produced $3.7 billion in premium, however the industry as a whole showed a 70% loss. The 2002 Insurance Expense Exhibit reported the industry losing more than $2.5 billion from 2000-2002. The end result of the losses was many bonding companies getting downgraded to junk status by AM Best other simply had to close their doors permanently. The rest of the sureties took note and quickly changed their ways. Underwriters have returned to more traditional underwriting guidelines and go through accounts with a fine tooth comb. The entire industry has become much more cautious about how to use capital. Contractors has since seen their bond lines reduced for single contracts and their aggregate capacity.

If you are a contractor and are discouraged with your current bonding limitations, keep in mind you are not the only one. Many contractors compare what they have today to what they had a couple years back and go looking for a new agency only to find similar terms elsewhere. Always keep in mind that every cloud has a silver lining. Bond lines have been reduced, however the value of a bond has improved due to the conservative underwriting practices in place; contractors can no longer obtain the bonding required to participate on contracts they are not financially qualified for (obviously this is only a plus for contractors that are financially healthy).

It is more important than ever for contractors to have an agent that truly understands suretyship. A surety bond agent should be able to give you sound advice to improve your financial situation and help your business grow. A good agent does not just write bonds, they consult contractors to make changes so the bonding companies have less of a risk, thus increasing bond capacity and lowering premium rates. A contractor must be comfortable that their agent is knowledgeable enough to help them make the right decisions, it is absolutely necessary in today’s surety bond market.

Webmaster of several Surety Bond related web sites including the Surety Bond Blog and the Surety Bond Forums.

Should I lease a car or buy it?

Think of a term life insurance policy as leasing a car. When you lease a car you get the benefits of using the car, but when you stop paying you don’t have a car anymore. As with term insurance as long as you pay your premiums you get the benefit of the term life insurance policy, but when you stop paying, you no longer have any coverage.

Whole life or “permanent policies” are designed to build up a cash value. So similar to buying a car you have an asset that you can keep. Unlike a car, hopefully this asset will grow in value. Whole life, Universal life and Variable Universal life are all different types of permanent insurance. Permanent insurance, most of the time, is meant to keep until you die or as a saving vehicle.

The way the policy grows in value gives you the different names of insurance such as, Whole Life, Universal Life, and Variable Universal Life. That leads to the understanding of the different types of permanent policies.

” Whole Life- Is an insurance policy where premium payments are usually the same throughout the life of the policy, as is the death benefit. You usually need to pay the premiums as long as the policy is in force.

” Universal Life - Is an insurance policy where premium payments may be changed and the death benefit can also be changed by the owner. Usually if the death benefit is being raised you will have to show some evidence of insurability (medical information) or other information requested. Your policy grows at a stated interest rate which changes every so often.

” Variable Universal Life - Is an insurance policy where premium payments may be changed and the death benefit can also be changed by the owner. Usually if the death benefit is being raised you will have to show some evidence of insurability (medical information) or other information requested. Your policy grows at the rate of your investment choice you choose. Since you may invest in market instruments similar but not exactly like mutual funds. Your policy can lose value causing larger premium payments than expected.

Take a step back and think about it from the insurance company’s point of view, its easier to understand the difference. A portion of the cash value that builds in the insurance contract will pay for the “cost of insurance”.

Whole life- The insurance company is taking most of the risk. They are paying a death benefit to you no matter what happens to the cash value in the account. As long as you make your payments the insurance company has to pay your death benefit. This may be the most expensive.

Universal life - The insurance company is taking some risk. The policy grows give the current interest rate it pays. At times you are only able to earn low interest rates. You may need to make up more payments to keep your policy.

Variable Universal life - The insurance company has taken the least amount of risk. In the Variable policy the rate of return is variable, meaning you don’t know how fast your policy will grow or shrink. This type of policy is most likely used for someone who is younger and can ride out the volatility of their portfolio. Since you take on the most risk in this type of policy it usually has the smallest premiums.

Contributed by www.searchforadvisor.com
Searchforadvisor.com is an independent firm based in Denver, Colorado

If you’re looking for life insurance, you’re no doubt confused. This is because there are so many different kinds of life insurance out there that is can be difficult to tell what is what. Term Life Insurance is essentially a type of insurance that is taken out for a specific period of time, and does not build a cash value.

Seems fairly self explanatory, but it’s often not. If you purchase term life insurance, you purchase coverage for a particular length of time, say ten years. At the end of those ten years the insurance lapses, or you can renew it. Normally the length of the term will be annual, seven years, or ten years.

The immediate benefit of term life insurance is that it tends to be cheap to begin with. However premiums increase over time as the policy holder grows older. If you have annual term insurance, you will find that your premiums go up ever year. Those who invest in longer periods will keep the same premiums for the length of the insurance. This can mean slightly higher premiums on the long run.

The benefit of term life insurance is that it gives the insured more flexibility than other types of policy, such as whole life. Many people with families need their money to be going towards their children rather than accruing in a policy which is essentially only a safety net and unlikely to be needed.

The requirements to be eligible for term life insurance are much the same as other policies, you still have to be in good health, and being a non smoker will always help bring your premiums down. You will also be required to undergo a physical to ensure that there are no problems which could make you a greater risk than you initially appear.

Term life policies are also cheaper than the other popular alternatives, whole life insurance or variable life insurance, because term life policies do not build up a cash value. The money you pay goes directly on insurance premiums and nothing else. Essentially, term life policies are a cost effective and simple way to make sure your family has a safety net.

View our Recommended Source for Insurance Quotes it is a simple site that provides free quotes for all types of insurance.

Life Insurance Quotes

Home Owners Insurance

There are many types of life insurance policies. Before you venture out for one, learn about them and see which one is applicable to your needs best. The following are the most common ones:

1. Term life insurance: This type of insurance is the most basic of all. Its one and only function is to cover your life with an amount of cash which on even of your death will be given to your nominee. Here the death benefit is equal to the policy limit. This is a good way to have mental peace in the conviction that you will provide for your family even in the event of death. This is good thing to have as a stand by any day.

2. Whole life insurance: This type of policy besides providing a fixed amount to your nominee on your death, it also gives you a financial gain over time as an investment would. The benefits you get out of this type of insurance is:

a. pays a fixed policy amount in event of death
b. gives you an investment amount that is free of tax
c. protects you from rising prices – the premium is fixed for the life despite market fluctuations
d. pays dividends as any good investment plan
e. offers you freedom to sell the policy back at any given time you choose

3. Variable life insurance: This type of insurance is much more flexible than the whole life insurance. The best benefit here is the fact that it allows the policy owner to borrow against the policy maturity amount. In this way not only you are insured but you also have a very decent source of borrowing at a lower rate than the market price interest rates. The variable life insurance too offers the benefit of tax-free ash accumulation that is a great incentive for investing in insurance the world over. There is another benefit that accrues from this type of insurance, i.e. the amount that is to be paid as a benefit to the nominee of the policyholder can be varied according to the need of the beneficiary (in relation to the funds available in the account).

4. Universal life insurance: This insurance one of the most flexible of all types of insurances. It not only covers the death, but also allows you a host of other benefits:

a. As all insurance policies, it pays the beneficiary a pre-arranged amount of cash in the event of your death
b. It provides a tax-free cash investment – which can accrue interest at market value
c. It allows complete flexibility on the premium making it easy for you to keep up with your payments even in lean times
d. At the same time this type of insurance allows amount flexibility

5. Universal variable life insurance: This is the ultimate among all the insurance policies. It allows you complete freedom on the way you invest and recover your investment. You have full control upon your cash at all times:

a. it pays the beneficiary a pre-arranged amount of cash in the event of your death
b. It provides a tax-free cash investment – which can accrue interest at market value
c. It give you total premium flexibility
d. It allows to withdraw cash from your policy at any given time throughout your life time
e. It allows you to borrow against the maturity amount at subsidized rates of interest
f. It allows you to terminate the policy at any time, however, in that event your maturity amount will be reduced according to the time in question

Life insurance first and foremost role is to protect the near and dear ones in even of one’s death by providing an alternative source of income. Today, however there are a number of benefits added to the main role. Check out the latest developments and choose well. Get value for your money.

Robert co-founded Insurance4USA.com, an insurance quote shopping service, in 1999. He has been a licensed insurance agent in New York State since 1990.

1. Health Savings Accounts (HSA)

This is a strategy where the employer buys a health plan with a large deductible. Typically, these are groups that are coming from a plan with a very low deductible. Since the higher deductible plans are usually much less money, the money saved is used to put into the employee’s “Health Savings Account.” The money in this account is used by the employee to pay qualified medical expenses. If it’s not used, the money rolls over to the next year. The money belongs to the employee, even if they leave the company.

2. Health Reimbursement Arrangements (HRA)

This is very similar to the HSA above but a portion of the qualified medical expenses not covered by the insurance is “pledged” by the employer, that is, the employer only spends the money, if there is a portion of the bill not paid by the insurance. This would be more favorable to the employer since on an HSA the money goes to the employee, whether there are claims or not. The problem with HRAs is that there are very few carriers that offer them right now.

3. Medical Reimbursement Accounts

This is very similar to HRAs above and extremely flexible. It’s otherwise known as partial self-funding. Employer buys a larger deductible and if the employee uses up that deductible, the employer pays all or a portion of it, depending on how a pre-arranged agreement is written. This goes for other expenses not paid by the insurance. The idea is that the employer self insures the typically smaller expenses with their own cash, (presumably, the savings in premium dollars from going to a higher deductible.) The downside to this is that many carriers prohibit the use of this strategy with their plans. It can be very effective but make sure you use an experienced third party administrator as there may be some legal and tax documentation required. Otherwise known as Section 105.

4. Kaiser.

More and more groups are moving to Kaiser. It is typically, benefit for benefit, less money than just about every other plan. Kaiser is spending billions on the future and their quality control is promising.

5. Offering Blue Cross and Kaiser side by side. Blue Cross has a new program where only five employees need to enroll with Blue Cross. The rest can be with Kaiser. This is a ground breaking opportunity in flexibility.

6. Blue Cross Elect. Blue Cross has a portfolio called Elect with 16 plans in it comprised of HMOs, PPOs, and an EPO plan. Each of these plans is priced from low premiums up to a much higher premium.

The beauty of this program is that Blue Cross allows the employer to “define” how much premium they are willing to pay towards an employee’s cost. For example, Blue Cross offers a $10, $20, $25, $30, $35, and a $40 copay PPO plan. The $10 plan is the most expensive of this group.

After viewing all of the premiums for the various plans, the employer can establish, arbitrarily, which plan they are willing to pay, say the employee only premium for. In this case, let’s say it’s the $25 copay plan. The employee can buy the $25 copay plan and it doesn’t cost them anything. However, if they want the more expensive $10 copay plan, the employer would payroll deduct the difference in premium costs.

Let’s say they have dependents they want to cover but the employer only wants to pay for the employee only. The employee could take the lesser expensive $40 copay plan, and use a little bit of the savings to help them with the costs of adding their dependents.

This has been a highly successful program because it gives the employees a greater number of choices, helping the employees be more definitive in their costs and needs, and at the same time, allows the employer to more efficiently define their costs.

This information is time sensitive and can change at anytime. If you have a question or need more information, please contact me at mail@thestrategyguide.com. - Todd Rich

Todd Rich is an expert on California Small Group Health Insurance Plans and has written four books on the subject. To learn more about Todd and his books, please visit http://www.TheStrategyGuide.com/ezines.

While shopping for auto insurance, an individual always aims for lower cost of insurance. In that case a good credit score may help to lower the cost. Credit score is a statistical method of evaluating an applicant’s credit worthiness. Companies are always trying to pool that part of the consumers which will provide the maximum profit with minimum loss. So they try to judge the rate of an insurance policy against the actual amount of claim. It has been found that almost all auto insurers use the credit information to decide whether to issue a policy. They even set the premium level on the basis of the credit score.

The companies generally do not look at the actual credit report. They just look out for the credit score. In fact they receive the credit score from any of the three major national credit depositories - Equifax, Experian and TransUnion. Credit scoring is a method to determine the likelihood that credit users will pay their bills.

Credit scores are prepared by analyzing a borrower’s credit history. The factors considered while calculating a credit score are:

• The duration for which credit is used.
• The amount of credit used versus the amount of credit available.
• Record of whether payments are made in time.
• Employment history.
• Length of time at present residence.
• Negative credit information such as bankruptcies, charge-offs, collections, etc.

Now the insurance score is based on the FICO score. It is a credit score developed by Fair Isaac & Co.

Raise the FICO score: One can raise the FICO score over a period of time through the following ways:

• Pay your bills in time. Late payments can have a serious impact on your score.
• Reduce your credit-card balances. If you are “maxed” out on your credit cards, this will affect your credit score negatively.
• If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.
• Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.

Insurance score: There is another concept called insurance score which also plays an important role in determining the cost of insurance. An insurance score predicts whether a person is likely to file a claim in the future. This helps the insurance companies to determine the amount of premium to be charged. An insurance score is a numerical ranking based on a person’s credit history. It predicts the average claim behavior of a group of people with essentially the same credit history. Typically a good score is assumed to be above 760 and a bad score is below 600. People with low insurance scores tend to file more claims. But there are exceptions. For example, It has been found that teenagers as a group have more accidents than people of other age groups. But there are some teenager drivers who never had an accident.

Insurance scores do not include data on race or income because companies do not collect this information for insurance. Insurance score is not much concerned with the tendency to take a new credit. Instead it focuses on the issue of stability.

Studies have shown that how a person constructs his financial planning is a good predictor of insurance claims. It is accepted that people who manage their finances well can also manage other important aspects of their lives, such as driving a car. The factors such as geographical area, previous crashes, age and gender, insurance scores collectively enable auto insurers to price more accurately, so that people less likely to file a claim pay less for their insurance than people who are more likely to file a claim. Insurance scores are useful to the insurer to differentiate between lower and higher insurance risks people and thus to charge a respective premium.

There exists a kind of debate regarding the use of insurance credit scoring. Insurance companies claim that the use of these scores helps them to issue new and renewal insurance policies based on objective, accurate, and consistent information, better anticipate claims and better control risk. This enables them to offer more insurance coverage to more consumers at a fairer cost.

Opponents of insurance credit score argue that companies can use insurance credit scores to non-renew coverage regardless of whether a claim has been filed or premiums have been paid in time and that credit scoring focuses on a consumer’s economic status. People with poor credit scores sometimes pay 4 to 5 times as much as the other consumer.

One aspect of insurance score is very important. While it is easy to obtain the credit score, it is difficult to get the insurance score. There is no hard and fast rule on the part of companies to hand it over and most companies don’t.

This article may be freely republished in any electronic media provided author biobox and the links are kept as it is.

Evan T. Smith is a contributing author to the Insurance Discussion Board.