|
Q&A: Smoke-free policies
|
 |
November 2, 2000: 7:21 a.m. ET
Tips on COBRA coverage and choosing the right liability policy
|
NEW YORK (CNNfn) - The rates on a term-life policy taken out by a non-smoker do not change if that individual decides to take up the habit later on. Also, when buying life insurance, it's a good idea to aim for 6 to 8 times your annual gross salary.
Navigating the ins and outs of your insurance policy can be tricky business. As such, consumers sometimes fail to realize they're underinsured or overinsured, as the case may be, until it's too late. Here's your chance to find out the facts from a group of experts at the Consumer Federation of America (CFA).
Questions related to senior health insurance, including Medicare and long-term care policies, are fielded by Bonnie Burns, director of consumer education for California Health Advocates, the state's insurance counseling program. Check back each week to read the latest Q&A on our Insurance page.
Question: I have a term-life policy that I make monthly payments to, based on the non-smoker rate. I have since started smoking and have not notified the company and am not currently paying the smoker premiums. What are the repercussions should I die? Thank you. - Guy
Answer: Once a policy is purchased, the classification of non-smoker will not be changed to smoker if one takes up the habit. A false answer to the smoking question when applying for insurance could result in the policy being voided if death occurs during the period of "contestability," usually two years. - Jim Hunt, CFA
 Question: I own a vacant lot in a suburb. There are several tall trees that could possibly fall on a neighbor's house. What kind of insurance do I need to get? - William
Answer: You need liability insurance. You probably are covered by your homeowner's policy for this (their home policies also probably cover it, unless you were negligent) but you should check with your insurer. - Bob Hunter, CFA
Question: I am a software developer. I work for myself and have been covered by COBRA until now (it ends at the end of this month.) My coverage is not convertible. Do you have any suggestions on how I can get or look for reasonable rates on medical and dental insurance? (Note: I'm not interested in an HMO.) - Ben
Answer: We are surprised that you are not able to convert your insurance. Check that out again. Health insurance, if it is good, is expensive. Since you are not interested in an HMO, you need to shop among Blue Cross and the large life insurance companies in your state. Check with your state insurance department to see if they have a price guide to assist you in your shopping effort. - Bob Hunter
Question: I am not sure what type of questions you are looking for. However, I'll ask anyway. We currently insure with Allstate. Our November renewal just came in the mail for the house insurance, and increased from $1,507 to $1,908, about 26 percent. This seems like a huge jump and we are looking for a new company. Do you have any tips for Dallas-area reputable companies that offer reasonable rates on car and homeowner's insurance? - Rick
Answer: You should call the Texas Department of Insurance or visit their Web site and get their homeowner's rate guide. It is free and it gives you sample prices from all the leading writers to assist you in your quest for lower rates. The typical user of the Texas price guides for home insurance saves $100! - Bob Hunter, CFA
 Question: Recently, my wife left her job as a CPA to raise our 11-month-old daughter. Leaving her job, she left some great benefits, not to mention the paycheck. Now that we are living on one paycheck, the thought of life insurance has become a priority for us. If I should "depart earth" unexpectedly, my wife would have a 30-year mortgage of $180,000, student loans of $17,000 and a car payment on her hands. Let's not forget those little everyday expenses such as food, clothing, doctor visits for the baby, etc.
I have searched the Web high and low for information regarding life insurance. Whoa! The amount of information out there is mind-boggling. It seems everyone is selling insurance. I am 30-years-old, my wife is 28. What should we be looking for in a life insurance policy? How much of a policy do I want or need? What are some of the pitfalls to avoid with life insurance policies? Any information would be greatly appreciated. - Tony
Answer: As Tony's wife, now at home with a 1-year-old, is a CPA with substantial future earnings power, she also should have life insurance unless to do so would require less on Tony. But at ages 28 and 30, term-life is cheap and substantial amounts can be bought for very little. An excellent source of rate comparisons is www.term4sale.com. We like the 10-year term at Ameritas because it keeps premiums low and, if one's health changes when renewal time arrives, the term can be converted to a low-load, cash-value policy. As for how much to buy, try a rule of thumb of 6 to 8 times annual gross salary, the larger multiple if little or no group life coverage at work.
The main pitfall to be avoided is buying a heavily commissioned cash-value policy that one is unable to keep at least 20 years. - Jim Hunt, CFA 
|
|
|
|
|
|
CNNfn's Insurance Page
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
