Lockdown causes home insurance premiums to decrease

Insurance experts say that there has been a downward shift in home insurance

insurance

premiums due to a steep drop in reported crime since the start of the coronavirus lockdown.

In the last three months, the average buildings and contents policy has fallen by 0.3%.

However, average premiums are up 3% when looked at over a 12-month period. Overall, premiums have increased just 1.9% in the six-and-a-half years since Consumer Intelligence first started collecting data in February 2014. Despite premiums edging up to their highest recorded point in June – before falling back again in July – prices have remained broadly stable for the last three years.

Homeowners in the north and the east coast continue to pay the most for their insurance policies. They are the only two regions across the US to attract premiums that are higher than the national average.

This recent reduction to home insurance premiums has not been felt by both our age groups. Premiums for the under-50s have remained flat in the last three months. It’s only the over-50s who have benefited, with their annual policies now 0.9% cheaper than three months ago.

Older properties, those built between 1925-1940, saw premiums rise 4.4% in the last 12 months, the most of any segment. This was closely followed by houses erected this millennium (4%).

Robert J Russell – Broker Owner of InsurancePricedRight.com, concludes:

“It’s perhaps no coincidence that this period takes us through the recent lockdown where the vast majority of people were spending much more time at home. Crime rates and home claims have both declined in recent months, which is the most likely reason for this small deflation in premiums.”

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How much money do you have in your Life Insurance Policy?

Life insurance can provide much-needed cash for loved ones you leave behind when you die. That financial safety net for those who depend on you for support is the primary reason to buy a policy.

But life insurance also can provide cash for you while you’re living—that is, if you have a cash value life insurance policy. This is one of the perks of a permanent policy and a key reason it costs more than a term life insurance policy (along with lasting your entire life).

You can access the cash in a variety of ways. That’s right: It’s yours for the taking. Before you do this, though, understand your options and the pros and cons of each.

What Is Cash Value?

When you buy a cash value life insurance policy, the premium you pay doesn’t just go toward the death benefit—the amount that’s paid to your beneficiaries when you die. It also goes toward a cash value account and internal policy costs.

The cash value in a life insurance policy grows at either a fixed or variable rate, depending on the type of policy you have. A whole life insurance policy will have a fixed interest rate and usually pays dividends that will help the cash value grow. Universal life insurance often has variable rates, so cash value growth will depend on investment performance.

The cash value grows tax-deferred. You can even take cash out of a policy tax-free if you use the right strategy to access the cash.

Withdrawing the Cash You Need

Because the cash in a permanent life insurance policy is yours, you can withdraw it when you want. Simply call your insurance company to let it know how much you want to withdraw, and it will wire the cash to you or deposit it into your bank account, says Josh Hargrove, a Certified Financial Planner with Insight Wealth Partners in Plano, Texas.

Withdrawals are taken first from your “basis”—the amount you’ve paid into cash value through premiums. That money comes out tax-free because it’s considered a return of your basis. For example, if you have $50,000 in cash value and $30,000 of that is your basis, you could withdraw $30,000 tax-free. If you tap the earnings portion, though, you’ll have to pay taxes on the gains at your regular income tax rate, Hargrove says.

Withdrawing cash for a life insurance policy also will reduce the death benefit. That means your beneficiaries will get less when you die—which is something to consider before withdrawing cash from a policy.

Cash Withdrawal Pros and Cons

Pros: No interest is paid on a withdrawal.

Cons: A withdrawal reduces your policy cash value and death benefit. It may be taxable if the withdrawal exceeds the amount of premiums paid.

Borrowing the Cash You Need

Rather than withdraw cash from your policy, you can borrow it.

A life insurance policy loan can be a fast and easy way to get cash for a purchase such as a car, for retirement income or to help cover costs temporarily if you lose a job.

“Loans are the most common way policy owners access cash in a policy as they are completely tax-free,” says Chris Abrams, founder of Abrams Insurance Solutions in San Diego (as long you’re not borrowing from a modified endowment contract).

Plus, you don’t have to pay back the amount you borrow. But if you don’t pay it back, the amount will be deducted from the death benefit that is paid to beneficiaries.

Like any loan, though, there’s a charge to borrow. So the amount owed will grow over time due to interest charges.

The benefit of a participating loan is that you can continue to earn interest on the outstanding loan amount. For example, if the interest rate on the loan is, say, 5% and the return on your cash value is 7%, you’d still earn 2% on the amount you’ve borrowed, Abrams says. On the flip side, if the rate of return dropped to 0% in a down market, you’d have to pay the full 5% interest rate on the loan.

When borrowing from your cash value, you have to be careful not to borrow too much. If the amount of the loan plus interest owed reaches the total cash value of the policy, the policy can lapse.

Policy Loan Pros and Cons

Pros: No loan application or credit check. You can repay the loan on your own schedule, and the money goes back into your policy instead of to a lender. You may earn a positive arbitrage on the money you borrow.

Cons: The interest rate may be higher than other options. The loan will be subtracted from the death benefit if you don’t pay it back.

Surrendering the Policy for Cash

You can surrender your policy entirely to get the full cash value, minus any surrender charge. And you’ll have to pay taxes on any gains earned on the cash value portion of the policy.  Plus, you’ll be giving up your life insurance coverage because surrendering a policy terminates it.

“Surrendering a policy is always the absolute last resort,” Abrams says. If you’re considering ditching your policy because you’re having trouble paying the premiums, you do have other options if you can’t pay your life insurance bill.

For example, you could reduce the policy’s face value to lower your premium, or use the cash value to convert the policy to paid-up status to keep some amount of coverage in place. You also can tap the cash value in your policy to pay your life insurance premiums temporarily if you’ve fallen on hard times. If you do this, be cautious not to deplete so much cash value that your policy lapses.

Policy Surrender Pros and Cons

Pros: If the policy has a surrender or cash value above the surrender charge, that is money in your pocket.

Cons: Possible surrender charges might wipe out any cash value. You might have to pay taxes. Your heirs will not receive a death benefit.

Sell Your Policy for Cash

You can get more than the cash value of your policy by selling it to a third party through a process called a life settlement. The third party will pay you a lump sum that’s less than the death benefit on the policy—but more than the cash value. The buyer will then pay the policy premiums. When you die, the investor collects the death benefit.

You could consider a life settlement if you have an immediate need for cash that trumps the need for life insurance.

You must be a certain age—typically 65—or have a certain level of health impairments in order to qualify for a life settlement. You’ll have better chances of selling your policy the older you are, says Lucas Siegel, CEO of Harbor Life Settlements.

You can be younger than age 65 to sell a life insurance policy through a life settlement, but you generally must be very ill. “Life settlements are calculated by understanding your life expectancy, and most third-party buyers prefer to purchase policies with a life expectancy of 10 years or less,” he says.

Being highly qualified by age and health condition also will help you get a bigger payment. Work with reputable life settlement companies, and get offers from more than one company.

Be aware that there can be fees associated with life settlements, and you’ll pay income taxes on the amount you receive from the sale of the policy.

Life Settlement Pros and Cons

Pros: You’ll get more cash than you would by surrendering your policy.

Cons: There are restrictions to qualify for a life settlement. The cash offer will be much less than the death benefit of the policy.

Look at Other Options

Before you choose any of these options for tapping the cash in your life insurance, speak with your insurance agent or financial advisor. Discuss how your policy will be impacted by each option. Also, consider whether there are better alternatives for coming up with the cash you need rather than using your cash value. If you bought the policy to provide a financial safety net for your loved ones after your death, you don’t want to jeopardize that by raiding your policy for cash.

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Progressive reveals profits in face of pandemic refunds

Despite reporting a significant drop in claims and providing auto insurance customers with premium refunds, Progressive generated a substantial profit during the pandemic – a detail that consumer advocates believe is unfair to customers.

In a filing with the Michigan Department of Insurance, Progressive reported that it saw a 28.7% drop in accident claims in March this year, compared to March 2019. The company also said that claims were down 31.9% in March compared to February.

Notably, Progressive did not share its data for the month of April – the month when most auto insurers saw their biggest drop in accident claims.

Progressive’s actuary indicated that the company could provide a 22.8% refund, after expenses, to provide recompense to customers during the COVID-19 pandemic. But the insurer instead chose to refund 20% for April and May, saying the amount was its “best estimate of all associated effects.”

The insurer also revealed in a release that it saw $1.3 billion net income for April and May this year. The amount is more than double the $566.3 million net income the company posted for April and May last year.

Consumer Federation of America insurance expert Douglas Heller criticized Progressive’s profits, calling them “beyond extraordinary.”

Heller previously called for auto insurers to provide more premium relief to customers, after determining that the insurers’ giveback programs were “relatively meager” compared to the change in risk.

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Hey You – Driver!! Get off the Phone!!

Dangers of Cell Phone Use and Texting While Driving

Whether it is someone talking on the phone in line at the grocery store or texting at the movie theater, cell phone usage is just about everywhere. In an emergency, a cell phone can be a lifesaver. Cell phone use while driving, however, is an entirely different story and studies have illustrated the increase in accident risk it creates.In a survey conducted by the Federal Traffic Safety Agency, 2 in 10 drivers said they text while driving. Among drivers ages 21 to 24, half said they sent or received texts while behind the wheel.Distraction from cell phone use while driving (hand held or hands free) extends a driver’s reaction as much as having a blood alcohol concentration at the legal limit of .08 percent. (University of Utah)The No.1 source of driver inattention is use of a wireless device. (Virginia Tech/NHTSA)

(Traffic Safety Facts-DOT HS 811 611)Drivers who use cell phones are four times as likely to get into crashes serious enough to injure themselves. (NHTSA, Insurance Institute for Highway Safety)10 percent of drivers aged 16 to 24 years old are on their phone at any one time.

(Traffic Safety Facts-DOT HS 811 611)Driving while distracted is a factor in 25 percent of police reported crashes.Driving while using a cell phone reduces the amount of brain activity associated with driving by 37 percent (Carnegie Mellon)

(Traffic Safety Facts-DOT HS 811 611)It is the conversation, not the device, that creates the danger. (FocusDriven)The biggest influence on how teens drive is their parents. Almost two-thirds of high school teens say their parents talk on a cell phone while driving; almost half say their parents speed; and almost a third say their parents don’t wear a safety belt. (AAA Study)

(Traffic Safety Facts-DOT HS 811 611)

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Alabama Insurance Laws change in 2020

Starting Jan. 1, a new car insurance law is going into effect that could impact what could happen if you’re pulled over.

The new car insurance law will give a break to people caught driving without insurance.

Currently, if insurance can’t be confirmed, the person has 30 days to provide it.

If they can’t, their registration is suspended, they get a $200 fine, and they have to provide proof of insurance.

A second violation within four years means a $400 fine, proof of insurance, and a four-month suspension of vehicle registration.

The change: The state is taking away the four-month suspension.

The department of revenue says that once someone has paid the four hundred dollars and provided proof of insurance, taking away that person’s ability to drive is an extra burden on taxpayers because that person may not be able to get to work, school or other places.

The law also changes the period for second and subsequent violations from four years to three.


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It’s time to break up with your Car Insurance Company

(Consumer Reports) – Car insurance premiums nationwide have never been higher. Many of us renew our policies year after year without shopping around. But a recent survey of Consumer Reports members found that an overwhelming majority of those who changed to another carrier saved money.

Shopping around for car insurance can save money. (Consumer Reports)

Here are some easy money-saving strategies for car insurance.

Ready to shop around? We found that some insurers are better than others at attracting and retaining customers. And when it comes to overall satisfaction, just two national companies made it to the top of the ratings.

InsurancePricedRight.com topped the ratings, with an overall satisfaction score of 92 due to their ability to shop with all the major companies. USAA primarily serves military families. Amica also did well, but you may need a clean driving record and good credit reports to get its best rates, then there are the other 30-40 companies that we choose from.

Even if you don’t switch companies, you can still save by asking for a lower rate if your car is older or your mileage is low, say around 6,000 miles a year.

The bottom line? Consumer Reports advises reviewing your car insurance once a year. It could really pay off.

Another way to save money is to allow your insurance company to track your driving habits electronically for things like speed, phone use, and even the time of day you drive. Good drivers get lower rates with some companies. But the opposite is also true; your rates could go up based on the data. It’s something to think about.

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Are you paying too much for car insurance?

For the last 34 years people have always wondered if they are getting a good deal on their insurance or not – and this is what I have heard from them since I got my Insurance License.

Auto insurance is mandated by most states, but how much you actually buy beyond the minimum — that’s up to you. States usually want you to have liability insurance; that covers those that you would run into or hurt. It’s also best to have medical coverage for you and those in your vehicle. But the insurance for the car or truck itself, well, you need to think about that. A lot of people are buying insurance they don’t need, and that won’t pay very much if they have a problem.

Here’s the deal. If your car has high miles –150,000 to 200,000 miles or more — or if it’s older than 10 years, what you’ll be paid if you have a problem with the car itself is so little, it might not be worth what you’re paying each and every month.

Now how do you know for sure? Well call your insurance company or your insurance agent and talk it through. And ask this one simple question: if your car is totaled, what will they pay you? Often that single answer will tell you exactly what you need to do next.

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Car Insurance in Michigan

Some of the biggest changes to Michigan law made headlines when they passed legislative chambers or hit the ballot box in recent years, but will truly kick off in 2020.

Still waiting for cheaper auto insurance, or to place your first legal sports gambling bet? Those policies and a number of others take effect in 2020.

Michigan cars

Cheaper auto insurance

On July 1, 2020, Michigan’s new auto insurance law will go into effect, meaning Michigan residents will soon be able to change their level of personal injury protection, or PIP, coverage.

The law was signed in May 2019 and ushered in sweeping changes to the state’s auto no-fault policy, including allowing senior citizens and people with health insurance that covers auto-related injuries to fully opt out of PIP coverage. The other four levels of coverage available are unlimited coverage, $500,000, $250,000 and a minimum $50,000 option for some Medicaid recipients.

Each level of coverage would come with a guaranteed rate reductions on PIP coverage costs that begins July 1, 2020 and would last eight years. The reductions range between 10 percent for unlimited coverage and 100 percent for those who opt out.

Another major shift in the deal sets a fee schedule for what health providers can charge when treating auto-related injuries, which will be set to 190 to 230 percent of Medicare rates in 2023 when fully phased in.

It’s unclear exactly how much the changes will impact auto insurance costs for Michigan residents, and will largely depend on what type of coverage auto owners choose.

One big change will be a decrease in the fee charged by the Michigan Catastrophic Claims Association. The vehicle assessment fee is dropping from $220 to $100 starting in July 2020, and will only be charged to people who opt to continue unlimited PIP coverage as long as the MCCA isn’t in deficit.

Michigan cars

Medicaid work requirements

Beginning Jan. 1, 2020, most able-bodied adults between the ages of 19-61 in the Healthy Michigan program will have to prove an average of 20 hours of workforce engagement like working or job training per week, or 80 hours per month.

Exemptions include pregnant mothers, people with disabilities, caretakers of disabled dependents, caretakers of children under age 6 and individuals who have a medical condition that results in a work limitation.

The bones of the legislation passed in 2018, but in 2019 lawmakers went back for a few tweaks designed to make it easier for recipients to comply with the new reporting requirements.

Gov. Gretchen Whitmer lost a last-minute bid to push pause on Michigan’s new Medicaid work requirements, and the Department of Health and Human Services began sending out letters to beneficiaries explaining how to comply with the new program in December.

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10 Best States to avoid Stolen Car Problems

Car thieves are most attracted to vehicles they can access quick and easily. It follows that the auto insurer suggests the following 12 steps to help drivers prevent a stolen car claim:

  1. Keep your vehicle locked at all times, even while driving.
  2. When parked, never leave your keys in the car. Close all the windows and the sunroof.
  3. Never leave your car running and unattended.
  4. Avoid leaving valuables inside your vehicle where passersby can see them.
  5. Do not leave your vehicle title in the car. Too often a car thief is pulled over and gets away from the police because he or she can produce the auto registration. (If multiple drivers use the vehicle, the best suggestion would be to hide the registration in a secret location in the car that only the owners know.)
  6. Know where you’re going. Avoid known high crime areas even if the alternate route takes longer.
  7. Install an anti-theft system in your vehicle if it doesn’t have one. Thieves are reluctant to steal vehicles if they know the cars can be recovered quickly. Many insurers offer discounts for the types of systems listed below.
  8. Thieves prefer to work in the dark. Be particularly cautious at night about where you park your car. Park it in a well-lit area if possible.
  9. Look around. Be aware of your surroundings, especially in garages, parking lots and gas stations.
  10. Have your car’s vehicle identification number (VIN) etched on each of the windows. Car thieves want to get off cheap. They don’t want to go to the expense of replacing all the glass.
  11. On an incline, leave your car in park or in gear with the wheels turned toward the curb or some other obstruction. This makes it harder for thieves to tow your vehicle.
  12. If confronted by a carjacker, do not resist. Cars can be replaced; you can’t.

Location is another factor that can dictate whether or not insureds are likely to have their vehicle stolen. According to data collected by the U.S. Department of Justice and showcased by the Insurance Information Institute, many of the country’s less populated states also boast the lowest vehicle theft statistics.

Now for the Countdown to #1 ( Total Vehicles Stolen in 2018 )

10. West Virginia – 2,519

9. Idaho – 1,954

8. North Dakota – 1,775

7. Rhode Island – 1,531

6. South Dakota – 1,524

5. Delaware – 1,476

4. New Hampshire – 869

3. Wyoming – 839

2. Maine – 777

  1. Vermont – 253

Looking for car insurance? Visit: http://www.InsurancePricedRight.com

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Real Estate in Panama City Florida

 BY PAUL ESAJIAN | @PAUL_ESAJIAN

With the wake of the recession starting to wane, housing markets across the country are beginning to show signs of life. In particular, the Panama City real estate market has turned a corner, and looks to be able to capitalize on the rebound. Not unlike Miami, its distant cross-state neighbor, Panama City has relied heavily on the participation of foreign investors. For all intents and purposes, today’s Panama City real estate market is much different than it was just 12 months ago. Both sales and prices are rising at a sustainable pace, making the prospect of Panama City real estate investing that much more attractive.

Prices in the Panama City real estate market continue to grow relative to last year. In fact, the city’s 1-year appreciation rate topped out at 14.2 percent. Over the same time, homes in Panama City have appreciated at a rate that is more than twice as much as the national average (6.7%). However, Panama City real estate was hit so hard during the downturn that homes had much more ground to make up. Even with lofty appreciation rates, home prices are now averaging $185,000. That means homes in the city are almost $19,000 less than the national average.

Homeowners in the area have been fortunate enough to see a lot of equity return to the market. With appreciation historically high, homeowners have seen an average increase in equity of $25,449 over the last year. Homeowners across the country have only seen equity rise about $15,753 in the last year. This is great news for anyone considering Panama City real estate investing.

Rent prices are relatively stable, and availability is high. Rent prices have decreased by as much as 2 percent over the course of 3 months. This is 20 percent lower than the county average ($1,169) and 178 percent lower than the state average ($2,714).

Of course, no healthy housing market is complete without a supportive economy. That said, Panama City has an encouraging job sector that should support steady growth for years to come. The city’s current unemployment rate is 5.5 percent, the same rate as the national average. That current rate reflects an improvement of 0.8 percent over the course of a year. Perhaps even more encouraging, however, is the city’s job growth rate. Local employment growth is strong compared to other markets, and growing at a rate of 2.4 percent.

Strong fundamentals have enabled new housing construction to take off. The current level of construction is 35.8 percent above the area’s long-term average. Single-family housing permits, alone, have seen an increase of 12.4 percent in the last 12 months, suggesting that inventory has stabilized.

The Panama City housing market is more affordable than most markets across the country. However, for its own standards, it is historically weak. The average homeowner in Panama City spends about 10.4 percent of their income on monthly mortgage payments, whereas the national average has exceeded 14 percent. So while Panama City is less affordable than it has been in the past, it is still going to draw the attention of first-time buyers and those on a tighter budget. The area’s cost of living should give confidence to anyone considering buying a home here. At $47,000, the cost of living in Panama City is 10.6 percent less than the state average. These numbers could explain whey the population has increased 3.8 percent in the last year.

Affordability will also drive interest in Panama City real estate investing.

Affordability is only made more visible with the area’s very apparent foreclosure problem. According to RealtyTrac, the Panama City real estate market has about 1,007 homes in some state of foreclosure. Each of these distressed properties is either in default, going to be sold at auction or are in pre-foreclosure. Regardless of the home’s scenario, this particular market should entice the entire Panama City real estate investing community.

Despite having so many foreclosures, Panama City has actually reduced the amount by 25 percent from last year. The biggest drop can be seen in those that were to be placed up for auction. Now representing 32.8 percent of the distressed market, auction foreclosures dropped more than 50 percent from the previous year. Bank-owned properties, however, still make up the majority of the distressed market with 41.6 percent.

The amount of distressed properties made available should attract anyone interested in Panama City real estate investing. However, it is the discounts they offer that can’t be ignored. According to RealtyTrac, distressed homes in Panama City sell for 42.2 percent less than non-distressed homes; that is a savings of more than $42,000 per home. It is not hard to see why Panama City real estate investing is taking off.

Panama City, much like many of its Florida counterparts, has benefited immensely from foreign investments. In what many people have dubbed the “Miami Effect,” investors have fled the increasing prices of Miami to test the waters in Panama City. After the building boom, Panama City was left with an oversupply of apartments that has been steadily absorbed by foreign investors in recent years. There presence has brought an influx of money and activity to the area that has helped remove Panama City from a period of post-recession weakness.

The Panama City real estate market was hit hard by the recession, and the Gulf oil spill did nothing to help the city’s situation. However, the expansion of the U.S. economy and a number of strong indicators has put Panama City in a position to thrive in the coming years. Buyers and sellers are responding to the economic growth and a desire to be part of the booming city, a true sign of a healthy residential market. Look for Panama City real estate to make up a lot of ground.

Panama City Real Estate Market Summary:

  • Current Median Home Price: $185,000
  • 1-Year Appreciation Rate: 14.2%
  • Unemployment Rate: 5.5%
  • 1-Year Job Growth Rate: 2.4%
  • Population: 36,877
  • Median Household Income: $45,620
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