I am Retired -- why would I need Life Insurance????

I hear this pretty frequently -- I am retired and I really have no need for life insurance.  I have accepted that with a nod and simply move on to discuss other aspects of my clients insurance needs -- but  as I drive away it occurs to me that maybe they are wrong and just because they are retired does not mean they no longer need life insurance.

For this reason I compiled  my top 10 reasons why those retired folks need some permanent life insurance in force even after retirement:

1. It allows you to be more aggressive in spending your retirement funds on your own needs (We’re spending our children’s inheritance!) because you know that the life insurance will be there for your heirs, replacing the money you are spending with the income tax-free life insurance death benefit.
2. A portion of the death benefit generally can be available to help pay for care if you develop a terminal illness, and it can be used for additional care or other needs.
3. If you have to use your other liquid assets to pay for long-term care of any kind, the life insurance death benefit can replace those assets when you die.
4. The cash value in the life insurance policy can provide a ready source of cash if an emergency arises.
5. Recent studies show that almost 70 percent of individuals expect to be working either full- or part-time in retirement. Life insurance can provide money to replace that much-needed income stream when you die.
6. Life insurance can help satisfy some individuals’ need to control assets. You don’t have to gift away assets to avoid estate taxes because the life insurance benefit will be there to help pay those taxes.
7. Not all retirees are debt-free. Life insurance can help pay off any debts at your death.
8. Life insurance can be useful in dividing assets when there are children from second (or third) marriages.
9. The life insurance death benefit provides an extra source of cash for your spouse while he or she adjusts to new circumstances after your death and can alleviate having to make immediate financial decisions to generate cash.
10. Life insurance can help pay for final expenses, long-term care expenses (through an available Long Term Care Rider), and medical costs that may not be covered by Medicare.

Having life insurance in retirement can help provide much-needed peace of mind to you and your family members.  As the saying goes, “Life insurance is not for those who die, it’s for those who live.” There are plenty of reasons to have life insurance as you get older, so don’t be too hasty in dropping your insurance once you retire! Talk to your professional insurance agent to get all the facts and learn what may be best for your particular situation.

Call me -- 440-527-0304 to discuss those needs anytime retired or not! 

Saving pennies and spending dollars -- Why lowest price insurance is not always the best choice!

People typically purchase insurance because they have to, not because they want to.

I hear this often from clients.  Most of them are obsessed with the bottom line price, and I cannot say I blame them as we are all on tight budgets!   Most  people are happy to obtain the minimum required insurance coverage at the lowest price they can find.

That is --- until a claim comes along. Only then do they discover that buying the cheapest insurance available wasn't such a bargain after all.  They may have saved those pennies but now they are spending dollars to clear up a claim.

The quality versus cost argument is nothing new in the insurance industry. People who pay less tend to get less -- Ummm let me repeat that -- if you pay less you get less -- very seldom is it the other way around in this world.

So whether in the form of coverage's, limits or financial security when people choose cost over quality, they are often accepting risk they may not have fully considered.

As your insurance agent it is my job to fully explain those risk and to insure you understand your personal insurance needs.  Though many still choose cost over quality, it is important that they understand what they may be sacrificing.

Low Premiums

Would you rather have automobile insurance that protects you from damage caused by someone who is uninsured or underinsured? Uninsured motorist is commonly excluded from a policy to reduce the premium. Rejecting GAP Coverage, accident forgiveness, accidental death,  and/or reducing liability rates are other ways to save money. But these choices come with a risk. When shopping for insurance it's better to determine what coverage is desired, see how much that coverage would cost, and work with the insurance agent to help get the coverage you need at a cost you can live with!

Financial Stability

Although cost is important, the financial strength of an insurance company may be more important. Financially weak insurance companies are more likely to become insolvent or go bankrupt, which means that their policyholders are less likely to get their claims paid. Though purchasing insurance from a financially weak company may be cheaper, how valuable is the money saved on premium if there is no money to pay a claim?  Rule of thumb is simply this -- if you have never heard of them and no one has insurance with them -- you will need to do some additional homework to insure they are financially strong.  

Customer Service

Insurance companies don't typically assign an agent to their customers. Each time you call you speak to a different person which means you have to explain your situation over and over. You ought to look for an agent that offers personalized service. Those are the agents who are willing to go the extra mile to get you what you need.  This is invaluable when considering insurance.  I have so many people who call me and say things like "I never could get a call back," or "it took 45 minutes to talk to a human being who could not answer my questions anyway."  

A solid understanding of your insurance needs is the key to overcoming the quality versus cost argument. An experienced and reputable insurance agent can help you purchase insurance that is both economical and effective.

If you would like more information about any of our insurance products, please contact Herrholtz Insurance Agency at 440-527-0304!

Does my college student need renters insurance??

Now that people know I am a licensed insurance agent, I am getting those pesky questions that are hard to answer right on the fly. I had one over the weekend from a friend who asked me like Alex Trebek does on Jeopardy!

Does a college student need renters insurance? ?

Umm — I stammer — first answer well “yes” — but wait a minute — what about the homeowners policy?

CONFUSION??

The discussion kinda went like this:

me “umm yes I would think so” — 
friend “no my insurance guy said its covered on the homeowner’s policy”
me — “ya that’s right to a degree”
friend: “well that’s what they told me”

UGH — I went back to my adult beverage and fortunately the conversation shifted — but the next day I needed to know — do they need renters insurance?

Let’s face it — College Tuition is so expensive, it is literally Jesse James without a gun! Parents like me have sticker shock at what it actually cost to send anyone to college. It’s really no surprise all college kid parents are on a tight budget!

Can students or parents really afford renters insurance on top of all the expenses that come with going to school? Perhaps the better question is, can they afford not to? Considering the theft rates that plague college campuses, perhaps not. Whether you live on or off campus, there are several factors to consider:

If you’re not covered under your parent’s homeowner’s insurance.

Check with your parents to see if you’re covered under their homeowner’s policy. Typically, homeowner’s policies will cover full-time students who live in the dorms. KEY component — my friends daughter actually lives off campus — so no longer living in a dorm — therefore may not be covered under the homeowners policy.

However if they do live in a dorm — do you really want your homeowners policy responsible?

Most homeowner’s have high deductibles that you as the parent may not want to file a claim against and risk raising the rates. Homeowner’s policies may not cover liability, so make sure to evaluate whether you need that coverage or not.

If you live off campus.

As I stated above, most homeowner’s policies only cover full-time students who live in the dorms. Your landlord’s policy does not apply to you, so you may want to consider getting your own renters policy.

If you’ve got a lot of stuff you probably can’t afford to replace.

If you’re a student, you’ve got a lot of stuff. A laptop, a cellphone, X-box or playstation with a ton of games, a TV, your bike, clothes… That really adds up and it’s worth a whole lot of money to replace. Most renters policies will allow you to choose the amount you’d like to insure so you can replace everything with no cost to you. Renters policies typically have low deductibles and are very inexpensive.

If you’re clumsy/newly independent.

So you forgot about that quesadilla you were cooking and ended up burning the wall in the dorm. Or you couldn’t resist hanging a million posters in your room… with nails. Or you were throwing a football around and you hit the sprinklers and flooded the place. There are a million easy ways to cause damage to your living space, on campus and off, that you could be held responsible for the damage. Renters insurance can help cover any costs you may encounter living on your own for the first time.

Finally — -

If you like to throw parties, or hate doing chores.

Sure parties are fun, but what if someone gets hurt? Or if you put off shoveling the driveway after a storm, or cleaning up a spill, and someone slips and falls while visiting? You could be liable. Renters policies often cover that liability.

So there you have it — a more complete answer to the question — Does a college student need renters insurance?

If you have a college student and they do not have renters insurance consider calling your agent today or call Herrholtz Insurance Agency at 440–527–0304 we will make sure your covered!

Don't get caught without and umbrella? -- Why would anyone need an UMBRELLA of 1,000,000 or more??

I am finding that Insurance is a funny thing. No-one likes paying premiums, but everyone is sure glad they have insurance when something bad happens.

I have been suggesting to all of my clients the need for an umbrella policy. Normally, when I suggest it — I get the crinkled nose and the side-ways glance with the question “how much?” Then a really quick “no thanks.” Followed by — “I already pay enough for insurance!”

That may be true — but many of us are at risk and we are cheeky about how much exposure we actually have. Here are some examples — including a link to a New York Times Article about Umbrella Policies.

In this sue happy environment, there are many scenarios where one might be taken to court for more than $100,000 or even $1,000,000. One of the most likely events is to be at fault in a car accident. Medical costs alone can exceed $100,000 per person. Now imagine if there were 2, 4, or even 6 people in the car. Imagine if some of them were children. Here is one example from a NY Times article on umbrella policies:

One of Mr. Cox’s clients crashed into the rear of a car on a slick highway. A woman and a child were critically injured. After two years of litigation, his client settled the lawsuit for more than $5 million. The client had $15 million in umbrella coverage. The policy paid for the settlement and all legal costs. “Without the umbrella,” Mr. Cox said, “they would have been completely wiped out.”

We really don’t think about all the things that can happen that will exceed our liability limits like:

Your child gets into a fight at school and injures another student;
You write a comment on Facebook and get sued for defamation;
You hire a handyman to clean gutters and he falls and seriously injures himself;
Your dog bites someone; and
There are plenty of real life examples where even minor fender-benders turn into multi-million dollar claims!

The right umbrella amount depends on where you live, your profession and your aversion to risk. Liability coverage in home and auto policies rarely exceeds $500,000, yet 13% of personal injury liability awards and settlements are $1 million or more, according to the report, citing data from Jury Verdict Research. The amount of coverage you choose should bear some relation to your net worth. But note: if you’re worth $1 million, a $1 million umbrella is not going to protect you from a $2 million legal judgment, since it would still be worth a lawyer’s time to go after your personal assets. So even if your net worth is below $2 million, you should consider a $2 million umbrella.

Don’t skimp on coverage. Coverage at least equal to your current net worth is the typical recommendation. However, if coverage falls short, a judge could order you to pay up, liquidating savings and investments (retirement plans and trusts are usually safe), real estate and personal property — and even garnishing your wages. Consider adding coverage to equal the present value of your employment income stream.

In most cases, personal umbrella policies are available in million-dollar increments, from $1 to $5 million. While an umbrella policy is not required, it may offer increased protection in the unfortunate event of an accident.

No one likes to discuss insurance — however we can all agree it is a relief after an accident when you hear an agent say — “your covered.”

If you want to know more about Umbrella policies or simply have a question about your personal insurance be sure to call me at 440–527–0304 or via email at jherrholtz@farmersagent.com I would love to hear from you!

First time car buyers -- what is the cost and what car for insurance purposes should I choose?

Buying your own car for the first time can be an exciting experience, but it is also an expensive one, so you should make sure that you are prepared for the financial reality of owning and running a vehicle before you commit to this major new responsibility. The AAA estimates the average cost of running a car is $9211 a year, a figure that has increased by almost 2% over the last year. You can reduce some of the costs involved by choosing your car, but some expenses will be higher simply because you are a young driver.

Standing Costs and Running Costs

The costs involved with owning a car can be divided into those that you will have to pay, regardless of how far or often you drive it, and those that will depend on how much driving you do. You will have to pay the standing costs even if you never take your new vehicle out on the road, but the running costs are usually given per mile since they will only begin to build up when you start driving your car.

Standing Costs

1. Buying Your Car

The largest and most obvious expense will be the cost of the car itself, even if you are going for a cheaper, second hand vehicle rather than a brand new car. It is sensible to save as much as you can before you buy, since you will need a deposit of 10-20% even if you are not buying outright. Financing can be expensive, particularly for young people lacking credit histories, so if you can avoid borrowing or borrow from a family member instead, you will save a lot on interest. The money you spend on your car can sometimes be recovered by reselling or trading in when you are ready to move on to your next vehicle, but you should remember that the value of your car will decline with age. This is known as depreciation. If you resold your car the day after you bought it, you would be able to recoup most, if not all, of the original cost, but after a few years of wear and tear, your car might not be worth much of its original price. Some cars have better resale value than others, and choosing the right car can also help to keep other costs down. Smaller, less powerful cars can be much cheaper to register, insure and run, and maintenance costs can also vary. Check consumer reports before you buy to find the right make and model for you.

2. Title, Tax and Tags

The purchase price for your car may not include sales tax, which can add a substantial amount to the total cost. You will also need to budget about $400-500 for the costs of the title, which transfers ownership of the vehicle to you, car registration and a license plate. The title and license fees will only need to be paid once, and you will also need to pay a one-off initial registration fee. You will also need to budget for an annual registration tax, which will be about $75-80 a year, although it will depend on where you live, and what type of vehicle you own. Choosing a smaller car will save you a little on your registration fee, as well as making your gas and insurance costs cheaper.

3. Insurance and Breakdown Cover

The cost of insurance can be high for a young driver, but you have to be insured before you can obtain financing or register your own vehicle. Basic auto insurance should cover:

 – Liability: covers damage you might cause to other people’s property, and is usually required by law

 – Collision: covers damage to your own car in an accident.

 – Comprehensive: covers damage due to other causes, such as theft, vandalism or fire

Additional coverage is available for personal injury, collisions with underinsured drivers, or to cover the remainder of what you owe on your car loan.

The average cost of insurance for a driver with a clean record is $1029, but younger drivers will pay more. According to money.co.uk, a teen driver can be up to seven times more likely to have an accident than a middle-aged driver, for every mile that is driven. You can reduce your insurance premiums by choosing a smaller and less powerful car, and driving safely to avoid traffic violations and start building up a no-claims bonus. You might also want to select a policy with higher deductibles, which are the portion of the costs that you will have to pay out of your own pocket before the insurer will pay out, but remember that setting it too high will be a false saving if you find yourself unable to cover it if something does happen to your car. In addition to your auto insurance, you should also consider taking out breakdown cover from a company like AAA to ensure that help will be available if something goes wrong while you are driving.

Running Costs

1. Maintenance and Repairs

In order to keep your car running, you will need to perform some regular maintenance. It is a good idea to get into the habit of performing regular checks of the air filters, fluid levels and tire tread and pressure. How often you need to replace parts will depend on how much driving you do. You should budget for:

 – Oil changes, every 3000 miles, usually cost at least $25

 – Brake pad replacement, every 30,000 miles, usually cost about $250 each end

 – Tire alignment, if you notice the car drifting to one side, usually about $80

 – Tune up, if your car is not running right, usually about $130-280

 – Tire replacements, every 25,000 miles, usually $100-200 per tire

The AAA estimates that basic maintenance will cost about 4.6 cents per mile, but you should also allow some room in your budget for any unexpected repairs that might be needed.

2. Gas and Parking Charges

Gas, parking charges and tolls can add up to form a significant part of your car budget. The average driver travels 12,000-15,000 miles a year, so choosing a car that is more fuel-efficient can result in significant savings. A smaller engine with fewer cylinders will use less gas per mile, and it will also be cheaper to insure.