Top Personal Finance Blogs
Tuesday September 26th 2017

Do You Need PPI?

Payment protection insurance (PPI) is a type of insurance that will step in and cover your  loan payments in specific situations where you are financially unable to meet your obligations.  The most typical scenarios include losing a work position to redundancy, accidents or serious illnesses.  (more…)


Don’t Retire Early If It Means Going Without Health Insurance

Early retirement used to be a sign of prosperity, but nowadays, it seems almost foolish to try. There are no guarantees that the retirement income you have established today will be available tomorrow. Rates of return on investments are low. Add to that the difficulty of managing health care, and the outlook for early retirement looks bleak indeed.

Generally, we do not qualify for Medicare until age 65. That leaves a big gap for anyone wanting to retire at age 55. It’s important to look at all of your options and plan accordingly. If you have your heart set on retiring early, here’s what you need to know about making the most of health benefits available to you.

Piggy Back on Your Spouse

If your spouse has health insurance benefits through work and continues working, you may secure benefits that way. Generally, this works best if your spouse is a few years younger than you are. Otherwise, you may be in line for a spot of jealousy as your spouse comes home from the grueling grind every day only to find you relaxing in the sunshine. If your spouse just hasn’t reached retirement age, there is less chance of conflict.

Pensions

If your employer offers a good pension plan, you may be able to secure private health insurance cheaply until Medicare takes over. Such plans are becoming rare, as companies have begun scaling back benefits to meet ever-increasing demands for profits. Don’t assume the option isn’t there for you. Check into your pension plan and read it carefully. Some employers have been hoping to get away with denying promised benefits.

COBRA

Even if your pension does not include health insurance benefits, you can stretch those employer benefits out when you retire. Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the typical employer must allow you to pay them to continue your health insurance coverage for at least 18 months. You benefit from the employer’s group insurance rate. Be sure to sign up within 60 days of separation or you may lose this option.

Individual Health Insurance

Once your COBRA eligibility period is over, you’re on your own until age 65. Under the Health Insurance Portability and Accountability Act (HIPAA), those who receive COBRA benefits can secure a certificate that allows them to bypass coverage problems that arise because of a preexisting condition. If your health is good, you might be able to get special coverage that is designed only for catastrophic illnesses. You pay for your annual checkups, prescriptions and routine care. The insurance kicks in for large expenses only after they exceed the deductible.

Going Without

You really shouldn’t consider this an option at all, even if that means paying for our own health insurance. Going uninsured, hoping you make it to age 65 when you can afford that life-saving surgery, is no one’s idea of a relaxing retirement. You’d be better of working and knowing you’re protected if you get sick.


8 Ways to Waste Money on Insurance

Consumers don’t like risk and that’s probably why insurance is such a big business in America. There are some types of insurance you absolutely should not go without, like health, disability or long-term care, auto, flood, and renters or homeowner’s insurance. But what about all those other policies out there being pedaled on TV and online? Should you buy them? Here are eight types of insurance policies to which you can comfortably say, “no thanks.” That wasted money is put to much better use buying the vital types of insurance you have been neglecting.

Private Mortgage Insurance (PMI)

You can’t always avoid PMI, but you should whenever possible. If you owe more than 80% of the value of your home on a mortgage, the lender is likely to force you to pay for PMI as a high-risk borrower. Focus all your energy on paying down your mortgage principal until it is under 80% of the home’s value, then kick PMI to the curb.

Credit Card Insurance

You see ads on television all the time that say, “How will my family pay my bills after I’m gone? I don’t want to leave them with that burden.” Well, as it turns out, that burden won’t be theirs to begin with. Credit card debt is unsecured debt. If there are no funds in the estate to pay the debt, then the credit card has no further option. They have no right to pursue your loved ones for the debt. You are better off using that $15 a month to pay down the principle and leave your cards paid down instead.

Some purchase credit card insurance in case of disability. But this type of insurance does little for you. It will only cover minimum monthly payments (and you know where that gets you) so the debt will not really get paid. In addition, most lenders will work with you if you are disabled. Disability insurance is a much better value for the money. That money can be used to pay down the debt instead of just stringing it along with minimum payments.

Mortgage Life Insurance

Just like credit card insurance, this policy will pay the balance of your mortgage if you pass away before paying it yourself. The only person this benefits is your lender, since they are the beneficiaries. A good life insurance policy will let your loved ones decide if they should pay off the house or sell it.

Children’s Life Insurance

What parent doesn’t want the best of everything for their children? Children’s life insurance seems like just one more good-parenting tip. While its true there is an off chance your child might grow to have a chronic illness making life insurance hard to get, more often than not, your kids will be able to get term insurance through their employers. Think hard about how much better of your child might be if you used the money to invest in college or a first home instead.

Extended Warranties

Warranties are simply not necessary. Most products break down during the manufacturer’s warranty period. The money you pay for the warrantee might be unnecessary. If you bought it with a rewards card that offers free warranties, it’s clearly a waste of money. A good warrantee plan costs the same as a maintenance visit minimum and gives you the option of buying the warrantee and having the visit covered by it instead. Then you have coverage for a full year for anything else that might go wrong. Some warrantees come with free technical service on computer products, another good reason to buy one.

But when you look at all the warranties in your home, chances are only one product has given you trouble. It’s also very likely that the cost of warranties overshadowed the cost of repairs on the troublesome appliance. Consider keeping keep a savings account instead and start putting $60 – $100 a year in it for each appliance. When something breaks, you’ll have the money sitting and waiting to pay for repairs or a replacement.

Physical Damage Auto Insurance

Collision and comprehensive auto insurance makes little sense for most cars. When the value of your car breaks even with the amount you have paid for physical damage insurance, stop paying for it. Start putting the money in a savings account so you can pay for damages if they happen. If your car is older than five years, it’s probably time to start saving that money instead of paying it.

Rental Car Insurance

Most people renting cars already have their own cars. If you don’t own a car, then rental insurance makes sense. But the insurance on the car you already own covers anything that happens in the rental, so why would you pay twice for the same thing?

Roadside Assistance

While being able to call for a tow without worrying about the cost is nice, there are cheaper ways to get this coverage than buying from your car insurance company. Dollar for dollar the charges are similar to a AAA membership, but the extra claims on your policy might hurt premiums in the long run. That’s why its smarter to keep roadside assistance on a separate policy for the same cost.


Should You Take Control of Your Escrow?

Gain Control of EscrowManaging your own escrow used to be a popular technique among homeowners. But like all things, it has gone in and out of fashion. There was a time when taking control of escrow saved time and hassles. When the bank managed the fund, homeowners had to forward all of the insurance and tax bills to the escrow account, wait for it to get lost in the mail so they could send it again and wait to get threatening letters from the tax man or the insurance agent. Then there was the inevitable one-hour call to the bank or servicing agent, getting transfered to five representatives until you could find one who was willing to help you get things straightened out. But these days, letting the bank manage your escrow is nearly hassle free. But there are still good reasons to manage your own escrow.

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